CTM06735 - Corporation Tax: loss buying: related companies and co-transferred companies

CTA10/S676AA, S676AL, S676CB, S676CI, S676EC, S676EE

The restrictions in CTA10/PART14/CH2A, CH2C and CH2E use the concepts of related and co-transferred companies.

For the purposes of Chapters 2A, 2C and 2E, two companies are related to one another at any time when they meet

  • the group condition for group relief for carried-forward losses (CTA10/S188CE, S188FB, CTA10/PART5/CH5), or
  • any of the consortium conditions at CTA10/S188CF-CI.

It does not matter which would be the surrendering company and which would be the claimant company in an actual claim for relief. So long as the companies meet one of the conditions above, they are related (s676AL,s676CI).

Co-transferred company

The restrictions in CTA10/PART14/CH2A, CH2C and CH2E operate to restrict relief in certain situations involving co-transferred companies as well as companies that have themselves been transferred through a change in ownership (s676AA, s676CB, s676EC).

A co-transferred company is any company that was related to the transferred company both immediately before and immediately after the change in ownership.

In practice, a co-transferred company will also be a transferred company. The term is required to prevent certain surrenders of losses as group relief for carried-forward losses from one transferred company to another, in situations involving a major change in the business of a transferred company or a transfer of trade.