CTM06630 | Change of Ownership: Shell Companies – Apportionment of Non-Trading Amounts
From HM Revenue & Customs · Company Taxation Manual
to S705G
When the rules apply, any amount arising in the true accounting period (AP) in column 1 of the following table is to be apportioned between the two notional APs as nentioned in column 2. If any of the methods in column 2 would work unjustly or unreasonably in a case, such other method as is just and reasonable may be used instead.
| 1. Amount to be apportioned | 2. Method of apportionment | |
|---|---|---|
| 1 | The amount for the true accounting period of any adjusted non-trading profits from the company's loan relationships (see below). | Apportion the amount in column 1 on a time basis according to the respective lengths of the two notional accounting periods. |
| 2 | The amount for the true accounting period of any adjusted non-trading deficit from the company’s loan relationships (see below). | Apportion the amount in column 1 on a time basis according to the respective lengths of the two notional accounting periods. |
| 3 | The amount of any non-trading debit in respect of any debtor relationship of the company that falls to be brought into account for the true accounting period for the purposes of loan relationships under ( onwards). | If Condition A below is met, apportion the amount in column 1 by reference to the time of accrual of the amount to which the debit relates; or if Condition B below is met, apportion the amount in column 1 to the first notional accounting period. |
| 4 | The amount of any non-trading deficit carried forward to the true accounting period under (). | Apportion the whole of the amount in column 1 to the first notional accounting period. |
| 5 | The amount of any non-trading credits or debits in respect of intangible fixed assets that fall to be brought into account for the true accounting period under (), but excluding any amount within column 1 of row 6. | Apportion to each notional accounting period the credits or debits that would fall to be brought into account in that period if it were a period of account for which accounts were drawn up in accordance with generally accepted accounting practice (GAAP). |
| 6 | The amount of any non-trading loss on intangible fixed assets carried forward to the true accounting period under () and treated under that section as if it were a non-trading debit of that period. | Apportion the whole of the amount in column 1 to the first notional accounting period. |
| 7 | Any other amounts by reference to which the profits or losses of the true accounting period would (but for this provision) be calculated. | Apportion the amount in column 1 on a time basis according to the respective lengths of the two notional accounting periods. |
Non-Trading Profits from Loan Relationships
For the purposes of column 1 of row 1 of the above table, the amount for the true accounting period of any adjusted non-trading profits from the company’s loan relationships is the amount of the profits from those relationships chargeable under the rules in ( onwards) disregarding any amounts that fall within column 1 of row 3 or 4 of the table.
Non-Trading Deficits from Loan Relationships
For the purposes of column 1 of row 2 of the above table, the amount for the true accounting period of any adjusted non-trading deficit from the company’s loan relationships is the amount of the non-trading deficit calculated under the rules at onwards disregarding any amounts that fall within column 1 of row 3 or 4 of the table.
Non-Trading Debits in Respect of any Debtor Relationship
Condition A: The amount in column 1 of row 3 is determined on an amortised cost basis of accounting and none of the following provisions apply to the amount:
Deductions for late interest which are treated as not accruing until paid under ();
Debits for connected companies’ deeply discounted securities which are postponed until redemption under ();
Debits for close companies’ deeply discounted securities which are postponed until redemption under ().
Condition B: The amount in column 1 of row 3 is determined on an amortised cost basis of accounting and any of the 3 provisions mentioned under Condition A apply.