HMRC internal manual

Company Taxation Manual

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

CTA10/S943A, CTA10/S944, CTA10/S944A-E

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

(s943A and s944C)

Where a company has transferred a trade to a company in common ownership, it cannot make a terminal loss claim under s39 or s45F CTA 2010. However, the restriction on the latter does not apply to pre 1 April 2017 trading losses carried forward where the trade was transferred before 13 July 2017.

Commencement provisions

(s944 & s944A-B)

The successor may claim to set off pre 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 s45F by virtue of s944C(2).

The successor may claim to set off post 1 April 2017 losses against future total profits and future trading profits under 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 s45A and s45B have been met in relation to the predecessor’s trade, and

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