CTM08720 - Corporation Tax: change of ownership: companies with investment business: conditions

CTA2010/S677

Section 677 is modelled on CTA2010/S673 (CTM06300 onwards).

It applies where there is a change in the ownership of an investment company (or ‘company with investment business’ for periods on or after 1 April 2004) and:

• within a specified period beginning three years before the change, there is a major change in the nature or conduct of the business, or
• the change in ownership occurs after the scale of activities has become small or negligible and before any considerable revival of the business or
• after the change there is a significant increase in the amount of the company’s capital (CTM08750).

For accounting periods ending before 1 April 2017, the specified period is 6 years.

For accounting periods beginning on or after 1 April 2017, the specified period is 8 years. The 8 year period only applies however where both the change in ownership and the major change in the nature or conduct of the business occur on or after 1 April 2017 (F(No 2)A 2017/Sch4/Para 80.)

Where an accounting period begins before and ends after 1 April 2017, it is divided so that the period that falls before 1 April 2017 and the period that falls on or after that date are treated as two separate accounting periods (F(No 2)A 2017/Sch4/Para 190.) (See CTM04880.)

For the purposes of Section 677:

• change in ownership is defined in CTA2010/S719 (see CTM06340 and CTM06350).
• a major change in the nature or conduct of the business includes a major change in the nature of the investments held, even if that change was the result of a gradual process which began before the period of six years within which the change has to take place.