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HMRC internal manual

Company Taxation Manual

Corporation Tax: loss-buying: introduction


CTA10/S673 counters ‘loss-buying’, where a person buys a trading company wholly or partly for its unused trading losses rather than solely for the inherent value of its trade or assets. The new owner usually introduces new activity into the company, but in such a way that it would be difficult to persuade a Tribunal that one trade had ceased and a new one commenced. Thus, but for CTA10/S673, the company would keep its entitlement to relief for losses brought forward. CTA10/S673 applies where either:

  • within any period of 3 years there is both:
    • a change in the ownership of a company (CTM06340 and CTM06350), and
    • a major change in the nature or conduct of a trade carried on by the company (CTM06370 and CTM06380),


  • there is a change in ownership of a company at a time when the scale of its trading activities has become small or negligible (CTM06390).

Where the conditions of CTA10/S673 are satisfied all the company’s unused CTA10/S45 carry forward trading losses as at the date of the change of ownership are cancelled (CTM06420).

CTA10/S719 sets out the rules governing change in ownership of a company - see CTM06340. Reliefs other than trading losses may be restricted.