D6.326 Transfer of a trade where 75% common ownership—meaning of same trade
In most cases, it will be fairly obvious from the facts as to whether the same trade is being carried on by the successor company. However any dispute will be determined on the facts of each particular case.
Three cases are of note on this matter.
In the case of Barkers of Malton Ltd v Revenue and Customs Commissioners1 the issue disputed was whether the successor had carried on the trade at all. It was held by the Special Commissioners that the mere ownership of a trade during a period between what was the s 343 transfer (now a CTA 2010, Pt 22 Ch 1 (ss 940A-953) transfer) and a subsequent onward sale is insufficient for the successor company to retain the benefit of any losses. It has to actually trade.
In this case a garage business was hived down into a Newco, Newco was then sold (to the appellant) and its trade and assets were subsequently transferred to the appellant company. The case was brought by the buyer of Newco, which had wanted to make use of the losses that had accrued while the seller had been running the business. The initial transfer of the trade and the onward sale of the Newco shares to the buyer all took place within 90 minutes. During the 90 minutes that the trade was in the ownership of the Newco before the shares were sold, no transactions were processed and Newco had