CTM07020 - Transfer of deductions – Qualifying changes
CTA10/S730B, CAA01/S212C
A “qualifying change” of ownership has the meaning given in CAA01/Part 2/Chapter 16A (CA27820), and is described by four possible conditions. If any of the conditions is met then there has been a qualifying change.
The conditions look at the status of a company, ‘C’, at the beginning and end of the “relevant day”:
- Condition A: That the principal company or companies of the group or consortium owning C are different at the beginning and end of the day, or that at the beginning of the day there was no principal company and at the end there is one (or more);
- Condition B: That the principal company of C is a consortium principal company and at the end of the day the share it holds in C is more than it was at the beginning of the day;
- Condition C: That the relevant activity of C is a trade, and at the end of the day the trade is carried on in partnership by two or more companies following a transfer of the trade under CTA10/Part 22/Chapter 1 (CTM06060);
- Condition D: that C carries on the relevant activity in partnership at the beginning of the day, and by the end of the day C’s share in the partnership is less or nil.
If any of the conditions apply, then the day that they occur is the “relevant day” on which the “qualifying change” occurs.
Principal company is defined in CAA01/S212E both for groups and consortia. Broadly the principal company is the one at the top of the ownership chain of a group of 75% subsidiaries, which is not itself a qualifying 75% subsidiary of any other company. See CA27830 for further details.