CREC045000 - Losses: transfer of trade
Sections 940A-953 CTA 2010
The rules on transfers of trades in CTA 2010 do not apply to transfers of separate production trades between companies in common ownership.
The legislation in CTA 2010 prevents the trade from being treated as permanently discontinued in the hands of the first company and a new trade starting in the hands of the second company. Instead, the second company is treated as succeeding to the trade of the first company.
The AVEC and VGEC legislation in Part 14A CTA 2009 permits only one company to be the production company in relation to a film, TV programme or video game and treats the activities of that company in relation to each production as a separate trade.
As a result, once a production trade has commenced it is impossible for a second company to succeed to the trade in relation to the production. The rules in CTA 2010 do not apply.
Where a production company carries on a trade in relation to a qualifying production and that trade ceases, it may be able to pass any losses on to:
another trade in relation to a qualifying production that it is carrying on at the time of the cessation, or
another trade in relation to a qualifying production that another group company is carrying on at the time of the cessation.
See CREC043000 for details.