Commentary

D6.317 Implications on a transfer of a trade where 75% common ownership—losses

Corporate tax
Corporate tax | Commentary

D6.317 Implications on a transfer of a trade where 75% common ownership—losses

Corporate tax | Commentary

D6.317 Implications on a transfer of a trade where 75% common ownership—losses

Where the necessary conditions are met (D6.325—327), the successor company may claim to set off transferred losses as follows:

  1.  

    (a)     against the income of the trade to which it has succeeded, provided the losses1:

    1.  

      (1)     were pre 1 April 2017 trade losses (D1.1106) incurred in the predecessor's trade for which the predecessor has not claimed relief under CTA 2010, ss 37 (against total profits) or 45F (terminal loss relief) (see D1.1104, 1105, 1110), and

    2.  

      (2)     they would have been relievable if the predecessor had continued to carry on the trade

  2.  

    (b)     against future total profits of the company, provided2:

    1.  

      (1)     the losses were non-ring fence trade losses that arose on or after 1 April 2017 (D1.1106) and were incurred in the accounting period in which the predecessor ceased to carry on the trade or were carried forward to that period,

    2.  

      (2)     relief has not been given for the losses by way of offset against current year profits, prior year profits (D1.1104, 1105) or current year group relief (D2.215), and

    3.  

      (3)     the successor's trade was carried out on a commercial basis; and

    4.  

      (4)     the following conditions were satisfied in relation to the predecessor's trade:

      1.  

        •     the trade had not become small or negligible in the loss making period

      2.  

        •     the trade was not carried on outside the UK3

      3.  

        •     the trade was carried out on a commercial basis with a view to the realisation of gain in

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