Commentary

D1.1125 Meaning of change in ownership of company and major change in nature of trade or business

Corporate tax
Corporate tax | Commentary

D1.1125 Meaning of change in ownership of company and major change in nature of trade or business

Corporate tax | Commentary

D1.1125 Meaning of change in ownership of company and major change in nature of trade or business

Anti-avoidance provisions restrict the use of losses following a change of ownership as detailed in D1.1124A.

Special considerations apply where part of a company's trade is transferred to another company in the same ownership as part of a company reconstruction1 for further details see D6.317.

Meaning of change of ownership

This phrase should not be taken literally as the specific rules for determining whether a change in ownership has occurred may produce some odd results. For example, it could be expected that where a person acquires control of a company there will always be a change in ownership, which is not the case. For example, a person with an existing minority holding of 5%, could acquire a 50% holding without there being a change in ownership for the purpose of these rules. Thus if there was a major change in the nature or conduct of the trade at or about the same time as the person acquired the additional shares there would no restriction on the availability of any trading losses which might have accrued prior to that share acquisition.

References to ownership are to be regarded as references to beneficial ownership and similarly with acquisitions2 and there is a change in the ownership of a company where any of the following conditions are met3:

  1.  

    •     one person acquires more than half of the ordinary share capital of the company4 (see D2.108), or

  2.  

    •     two or

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