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HMRC internal manual

Company Taxation Manual

HM Revenue & Customs
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Particular topics: companies in partnership: transfer of relief between companies and partnerships

CTA10/S960 is designed to prevent companies using partnerships to transfer losses from one company to another in order to circumvent the stringent rules for entitlement to group relief by groups and consortia.  These rules are now at CTA10/S151 (4) (CTM80150 and CTM80155) and CTA10/S143 (CTM80525, CTM80540 and CTM80545).

CTA10/S960 prevents the sideways setting-off of losses, qualifying charitable donations and certain capital allowances where profits or losses have been bought or sold between partners for tax saving purposes.  The advantage is cancelled by keeping the partnership trade separate so that partnership losses etc. cannot be used by the company against other profits.  Losses, etc. outside the partnership cannot be set against the partnership’s profit or liability.

Very few cases to which CTA10/S960 could apply are seen in practice; they operate by discouraging.  Officers who encounter potential CTA10/S960 cases should seek advice from CTIS (Technical) before challenge.