Commentary

D7.828 Tax implications—general

Corporate tax
Corporate tax | Commentary

D7.828 Tax implications—general

Corporate tax | Commentary

D7.828 Tax implications—general

The tax implications of effecting relevant transfers (as detailed at D7.827) are set out in detail in the appropriate regulations1 and in FA 1988. Broadly, for such relevant transfers, the provisions of the corporation tax acts will apply subject to the following specific rules2:

  1.  

    (i)     for capital allowances purposes a trade will not be treated as ceasing and recommencing; all allowances etc that were available to the transferor will continue to be available to the transferee on the same basis

  2.  

    (ii)     loss relief that would have been available to the transferor if he had continued to carry on the trade, will generally continue to be available to the transferee on the same basis

  3.  

    (iii)     if the transferee carries on the transferred trade as part of its existing trade, the transferred trade will be treated as a separate trade carried on by the transferee. Similarly if part of a trade is transferred and the transferee carries on the transferred trade as part of its existing trade, the transferor is treated as having carried on the transferred trade as a separate trade. In both situations, apportionments of expenses etc are to be made on a just and reasonable basis

  4.  

    (iv)     where a transferee replaces a transferor building society as a party to a loan relationship or a derivative contract and the closing value in the accounts of the building society in relation to the loan relationship or derivative contract is different from the

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