Commentary

D6.327 Transfer of a trade where 75% common ownership—75% ownership test

Corporate tax
Corporate tax | Commentary

D6.327 Transfer of a trade where 75% common ownership—75% ownership test

Corporate tax | Commentary

D6.327 Transfer of a trade where 75% common ownership—75% ownership test

Common ownership of a trade (or part trade) is established by looking at the beneficial1 owners of a company's ordinary share capital2, which includes the interests of non-residents. Effectively, the interest in the trade carried on by a company is determined by reference to the proportion of the ordinary share capital held by a person in the predecessor and successor companies.

There is taken to be common ownership of a trade if the same person or persons owned at least 75% of the trade both3:

  1.  

    •     at some time within one year before the transfer of the trade, and

  2.  

    •     on or at any time within two years after that transfer

There is no minimum period throughout which the predecessor and successor companies must be in common ownership4).

For the purposes of determining ownership5:

  1.  

    (a)     a trade carried on by two or more persons is treated as belonging to them in the shares in which they are entitled to the profits of the trade

  2.  

    (b)     a trade or interest belonging to any person as trustee (otherwise than for charitable or public purposes) is treated as belonging to the persons for the time being entitled to the income under the trust

  3.  

    (c)     a trade or interest belonging to a company6:

    1.  

      (1)     may be regarded as belonging to the persons owning the ordinary share capital in proportion to the amount of their holdings of that capital7, or

    2.  

      (2)     may (if the

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