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HMRC internal manual

Company Taxation Manual

Corporation Tax: change of ownership: companies with investment business: introduction

CTA2010/S677 & CTA2010/S692

Sections 677 and 692 were introduced primarily to counter ‘management expenses buying’, and concern the acquisition of an investment company, or ‘company with investment business’ for periods starting on or after 1 April 2004, for its unrelieved management expenses and charges. They apply where the change in ownership occurs on or after 29 November 1994 except where it occurs under a contract entered into before that date.

For accounting periods ending before 1 April 1996, they can act to restrict the set off of management expenses and charges.

For accounting periods ending on or after 1 April 1996, interest is no longer dealt with as a charge but under the loan relationship provisions, so Sections 677 and 692 are extended to cover loan relationship debits and, for changes in ownership on or after 10 February 2005, non trading loan relationship deficits.

There is further guidance on Section 677 at CTM08720 to CTM08850 and on Section 692 at CTM08880 to CTM08930.

Companies with investment business are also impacted by other change of ownership (CTA2010/S719) issues in connection with Property Losses at CTA2010/S704 (PIM4250), and also intangible assets (CIRD48050 and CTM08880).