CTM06745 - Corporation Tax: loss buying: major change in the business of a transferred company: introduction

CTA10/PART14/CH2A

Chapter 2A restricts relief for losses and other amounts carried forward, in a situation where there has been a change in both the ownership and the business of a company.

The way the restriction operates is summarised as follows. However, this summary should be read alongside the rest of the guidance in this section for a full understanding of the rules.

· Both the change in ownership and the change in the business must occur on or after 1 April 2017.

· The change in the business must be a major change.

· The change in the business must occur within a required period. In general, the restriction does not apply if the change in the business occurs more than three years before or five years after the change in ownership.

· Where these conditions are met, the company cannot set certain carried forward losses incurred before the change in ownership against its affected profits. Broadly, the affected profits are profits that relate to the major change in the business and arise during the first five years following the change in ownership.

· In addition, the company is prevented from bringing into account certain debits relating to periods before the change in ownership, beyond a limited amount. This applies indefinitely, without reference to the company’s affected profits.