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CTA10/S730C

When there has been a qualifying change in ownership, see CTM07020, of a company, company C, the loss shifting rules act to prevent relevant claims by company C for certain deductible amounts which were highly likely to exist at the date of transfer, CTM07030.

A relevant claim means a claim by company C or a company connected with company C for:

• sideways loss relief against total profits under CTA10/S37, group relief under CTA10/PART5/CHAPTER4, or
• group relief for carried-forward losses under CTA10/PART5A/CHAPTER3.

Where the following conditions are met the deductions are disallowed for the purposes of the relevant claim for an accounting period (AP) ending on or after the change in ownership:

• There is a qualifying change in ownership;
• On the relevant day (CTM07020), it is highly likely that the amount, or any part of it, would be brought into account by company C, or any company connected with company C, in any AP ending on or after the relevant day (CTM07030); and
• The purpose, or one of the main purposes, of the 'change arrangements' is to bring the amount (whether or not together with other deductible amounts) into account as a deduction in any AP ending on or after the relevant day, CTM07040.

However, the rules in CTA10/S730C do not affect any deductions which could have been claimed or brought into account in the absence of the qualifying change.  For example, for relief of carried forward trading losses against subsequent trading profits of the same trade under CTA10/S45.

Where the claim is for group relief for carried-forward losses, those losses cannot be made up of amounts that were restricted deductible amounts in a previous AP.  For the purposes of calculating this amount, assume that the most beneficial use has been made of the carried-forward losses.

Change Arrangements

'Change Arrangements' means any arrangements made to bring about, or otherwise connected with, the qualifying change, CTM07020.