CTM06720 - Corporation Tax: loss buying: change in company ownership

CTA10/PART14/CH7

Broadly, the rules introduced at CTA10/PART14/CH2A-E use the same definition of a change in company ownership as the pre-existing loss buying rules (CTM06340).

However, for the purposes of these chapters, there is also a change in the ownership of a company if the following conditions are met (CTA10/S719(4A)):

  1. A person acquires ordinary share capital of a company, C,
  2. As a result, company C and another company, A, meet the group condition for the purposes of group relief for carried-forward losses (CTM82000)(CTA10/S188CE, S188FB, CTA10/PART5/CH5), and
  3. Company C and company A did not meet the group condition before the acquisition at 1.

This does not apply for loss buying rules in other chapters of CTA10/PART14, for example at CTA10/PART14/CH2 and CH3.

Note that the legislation refers specifically to the group condition. This means that, for the purposes of Chapters 2A-E, there will be a change in the ownership of a company, C, if;

  • companies A and C meet one of the consortium conditions (CTM82510) but do not meet the group condition,
  • a person acquires ordinary share capital of company C, and
  • as a result, companies C and A meet the group condition.

The change of ownership on companies meeting the group condition is not however limited to cases where previously one of the consortium conditions was met.

The definition of a change in company ownership at CTA10/S719(4A) only applies to Chapter 2E for acquisitions that take place on or after 1 April 2021.