OT21068 - Corporation Tax Ring Fence: Losses and Group Relief: Change in Company Ownership: Treatment of losses

Part 14 of CTA 2010 contains special rules dealing with a change in company ownership. In particular, under Chapter 2, where, within any period of 3 years there is both:

• a change in the ownership of a company, and
• a major change in the nature or conduct of a trade carried on by the company

or

• there is a change in ownership of a company at a time when the scale of its trading activities has become small or negligible

any carried forward losses at the date of the change in ownership are disallowed.

Detailed guidance can be found in the company taxation manual at CTM06300 onwards.

The rules in Part 14 were modified by F(No2)A 2017 for accounting periods beginning on or after 1 April 2017 where both the change in ownership and the major change in the nature or conduct of the trade occur on or after 1 April 2017. These changes extended the relevant period so that relief for losses brought forward will not be available where there is a major change in the nature of the trade over any period of five years in a window beginning not more than three years prior to the change in ownership.

The dates when the new legislation applies are set out at CTM06305.

This modification does not apply to decommissioning losses of oil and gas companies, where the relevant period in which the change in ownership occurs remains the same at three years. However the change does apply to non-decommissioning losses.

Guidance on these new rules can be found at OT21053 onwards.