The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
It may be necessary to carry out various preparatory steps before a group of companies are sold or acquired. This may be due to the fact that a purchaser only wishes to acquire certain assets or companies within a group, or the vendor wishes to retain certain assets or companies. This will be a matter for negotiation between purchaser and vendor. Some of the relevant tax considerations are set out below.
The transfer of a trade between group members is commonly referred to as a ‘hive down’, ‘hive up’ or ‘hive across’, depending upon where in the group structure the trade is transferred to. The legislation allows a trade to be transferred under ‘common 75% ownership’ with the ability to carry forward tax losses into the successor company. A tax-neutral transfer takes place for capital allowances purposes, as the pools are transferred at tax written down value.
The rules apply where one company owns at least 75% of another or both companies are under the 75% common ownership of the same person or persons. ‘Person’ can either be a company or an individual for the purposes of these provisions.
The transfer of trade rules apply automatically where the conditions are met, and therefore it is not necessary to make a claim to HMRC.
Please refer to the Transfer of a trade guidance note for further details, including the circumstances
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