CTM06065 - Corporation tax: company reconstructions: transfers of trade: without change in ownership - terminal losses

CTA10/S943A, S944 and S944A to S944E

When a trade ceases due to a company transferring a trade (CTM06060) to a company in common ownership (CTM06010), during an accounting period beginning on or after 1 April 2017, there are modifications to the normal cessation and commencement treatment of carried-forward trading losses.

Cessation provisions

(CTA10/943A and S944C)

Where a company has transferred a trade to a company in common ownership, it cannot make a terminal loss claim under CTA10/S39 or S45F.  However, the restriction on the latter does not apply to from-1 April 2017 trading losses carried forward where the trade was transferred before 13 July 2017.

Commencement provisions

(CTA10/S944, S944A and S944B)

The successor may claim to set off from-1 April 2017 losses against future income of the same trade provided the predecessor has not claimed relief for any prior and current year losses or made a terminal loss claim under CTA10/45F by virtue of CTA10/S944C (2).

The successor may claim to set off post-1 April 2017 losses against future total profits and future trading profits under CTA10/S45A or S45B provided that

  • relief has not been given under CTA10/S37 or CTA10/PART5 (group relief) in respect of the predecessor's loss,

  • all other conditions for carrying forward a loss under CTA10/S45A and S45B have been met in relation to the predecessor’s trade, and

  •  the relevant liabilities restriction (CTM06250) does not apply.