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HMRC internal manual

Company Taxation Manual

Change of Ownership: Shell Companies – Introduction

CTA10/Part 14/Chapter 5a

The change in ownership of Shell Companies rules were introduced by FA13 for changes in ownership on or after 20 March 2013. The rules were introduced to extend the long-standing CTA10/Part 14 change of ownership rules to include companies that are not carrying on a trade, investment business or UK property business.

In broad terms the rules prevent certain reliefs for non-trading debits and losses (CTM06620) where there is a Shell Company which undergoes a change of ownership as defined under CTA10/S719 (CTM06340).

For these purposes a Shell Company is a company which:

  • is not carrying on a trade
  • is not a company with an investment business; and
  • is not carrying on a UK property business.

If the rules apply, they treat the actual accounting period in which the change of ownership took place as two separate notional accounting periods, the first ending with the date of change and the second consisting of the remainder of the period. The non-trading amounts for the actual period are then apportioned between the two notional periods (CTM06630).