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HMRC internal manual

Company Taxation Manual

Corporation Tax: company purchase schemes: intent

CTA10/S713 to S715 (formerly ICTA88/S767AA)

CTA10/S713 to S715 (formerly ICTA88/S767AA) apply where there has been

  • a change in the ownership of a company (applying the rules in CTA10/S719 to S726, formerly ICTA88/S769), and
  • CT assessed on the transferred company or an associated company for accounting periods ending on or after the date of change remains unpaid for six months (CTA10/S713 (1) and (2), formerly ICTA88/S767AA (1) (a), (b) and (c)), and
  • it would be reasonable to infer from the terms of the transactions entered into in connection with the change in ownership, and/or other circumstances of the change, that at least one of the transactions was entered into on the assumption that a potential tax liability would not be met (CTA10/S714 (1), (2) and (3), formerly ICTA88/S767AA (2)).

The potential tax liability referred to in CTA10/714 (3), formerly ICTA88/S714 (2), is a CT liability that might arise on the transferred company or an associated company after the change in ownership in circumstances either reasonably foreseeable at the time of the change in ownership, or of which there was a reasonably foreseeable risk (CTA10/S714 (4) and (5), formerly ICTA88/S767AA (3)).

If the legislation applies HMRC is able to collect the unpaid tax from either:

  • any person who controlled the company at some time during either


  • the three years before the change of ownership of the company, or if shorter
  • the period since a previous change of ownership, or


  • any company which that person controlled at any time during the three years before the change of ownership (CTA10/S706 and S709, formerly ICTA88/S767AA (4) and (5)).

The unpaid tax is recovered by means of a CT assessment on that person in the name of the defaulting company.