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HMRC internal manual

Oil Taxation Manual

Transferable tax history - Restrictions on who can enter into transactions which can use the TTH mechanism

To access the TTH mechanism the seller and purchaser must make an election (see OT60050), but there are restrictions on who can make an election.

Companies that are associated with one another (section 271 CTA 2010) are only eligible to make a TTH election where either the  hive down condition  or the corporate restructuring condition is met.

The hive down condition is met where, within a period of 90 days starting with the effective date of the TTH election the purchaser ceases to be associated with the seller or any company associated with the seller. An election that meets the hive down condition is called a “hive down election”.

For example if A and B are associated and make a TTH election on transfer of an asset to B that is effective from 1 December 2019 then B must leave the group A is a member of in the period 1 December 2019 to 28 February 2020.

The corporate restructuring condition is met where the purchaser and seller are associated and make an election to transfer TTH and there is either:

  1. Another TTH election with a non-associated party (a third party election) that is made either:
  • In a period of 90 days ending with the effective date of the election between associated companies, or
  • In a period of 90 days starting with the effective date of the election between associated companies

For example if A and B are associated and make a TTH election that is effective from 1 December 2019 then the same TTH asset must be subject to a further TTH election with a non-associated third part either:

  • in the period from 2 September 2019 to 1 December 2019, or
  • in the period 1 December 2019 to 28 February 2020

Or:

  1.  A hive down election was made in respect of the TTH asset now being transferred with TTH in a period within 180 days from the effective date of the hive down election.

For example within Group Z Company A moves an asset to Company B and they make a TTH election on transfer of that asset that is effective from 1 December 2019.

Company B is then sold to Group Y on 1 February 2020 meeting the hive down condition. The original election is a hive down election.

Group Y can now move the asset from Company B in the period 1 February 2020 to 28 May 2020 (180 days from the date of the hive down election covers the period 1 December 2019 to 28 May 2020).