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HMRC internal manual

Company Taxation Manual

Corporation Tax: change of ownership: companies with investment business: during an accounting period (S678)

CTA2010/S678 (2)

For the purposes of Section 677 where the change in ownership occurs during an accounting period, that period is divided into two, the first of which ends with the change.

The two parts are treated as separate notional accounting periods for the purposes of calculating any restriction.

It is necessary to apportion the amounts in issue between the notional accounting periods to and after the date of change of ownership in order to establish whether there is any excess of management expenses, charges, interest, loan relationship debits or, for changes in ownership on or after 10 February 2005, non trading loan relationship deficits, to which a Section 677 restriction applies (CTM08780).

The rules for this apportionment are covered at CTM08800 onwards.