CTM06620 - Change of Ownership: Shell Companies – Non-Trading Amounts Restricted

CTA10/S705c, 705d, 705e

When there is a change of ownership of a shell company and the rules in CTA10/Part14/Chapter 5A apply, there are restrictions on certain non-trading amounts as follows.

Restrictions on Debits from Loan Relationship

The loan relationship debits to be brought into account for the accounting period beginning immediately after the change in ownership, or any subsequent accounting period, do not include any amount of relevant non-trading debits (as defined under CTA10/S730) which would exceed the amount of taxable total profits of the notional accounting period ending with the change in ownership when combined with any other relevant non-trading debits which have been brought into account for any previous accounting period ending after the change in ownership.

That is to say that the amount of relevant non-trading debits from loan relationships brought into account in the later period will be reduced to the extent they exceed the total taxable profits of the earlier period.

Restrictions on Carry Forward of Non-Trading Deficits from Loan Relationships

When a non-trading deficit carried forward into the actual accounting period is apportioned to the first accounting period in accordance with row 4 of the table in CTM06630 none of that amount may be carried forward into the accounting period beginning immediately after the change in ownership or any subsequent period.

Restrictions on Relief for Non-Trading Loss on Intangible Fixed Assets

Relief against total profits for any non-trading loss on intangible fixed assets under CTA09/S753 (CIRD13530) is to be considered and worked out separately for each of the 2 notional accounting periods using the apportionment methods in CTM06630.

Any non-trading loss on intangible fixed assets for an accounting period beginning before the change in ownership cannot be carried forward to an accounting period ending after the change, or treated under CTA09/S753 as if it were a non-trading debit of that period.