D6.316 Implications on a transfer of a trade where 75% common ownership—capital allowances
Where the necessary conditions are met (D6.325–D6.327), the trade formerly carried on by the predecessor is not treated as permanently discontinued and recommenced by the successor.
Consequently the predecessor's written down values and qualifying expenditure carry over to the successor and accordingly no balancing allowances or charges accrue to the predecessor in respect of assets transferred to the successor.
Allowances or charges after the transfer will be computed as if the successor had acquired the assets when the predecessor acquired them and as if the actions of the predecessor had been the actions of the successor1.
It should be noted that the carry over of capital allowances does not apply if the successor is a dual resident investing company (see D4.109)2 and is subject to restriction where the company reconstruction involves a business of leasing plant or machinery (see D6.330)3.
Where the whole of the trade is transferred to a company which takes it on as its own trade, HMRC treats4 the predecessor as having a chargeable period which ends on the transfer date and the successor as having a chargeable period which begins on that date. Where only part of a trade is transferred, that part is treated as a separate notional trade of the predecessor from the beginning of the accounting period in which the transfer takes place. HMRC suggests that capital allowance assets should be apportioned between that part and the balance of the trade on