CTM06735 | Corporation Tax: loss buying: related companies and co-transferred companies

CTA10/S676AA, S676AL, S676CB, S676CI, S676EC and S676EE

The restrictions in CTA10/PART14/CHAPTER2A, CHAPTER2C and CHAPTER2E use the concepts of related and co-transferred companies.

Related company

For the purposes of CHAPTER2A, CHAPTER2C and CHAPTER2E, two companies are related to one another at any time when they meet

• the group condition for group relief for carried-forward losses (CTA10/S188CE, S188FB, CTA10/PART5/CHAPTER5), or

• any of the consortium conditions at CTA10/S188CF to S188CI.

It does not matter which would be the surrendering company and which would be the claimant company in a claim for relief. Provided the companies meet one of the conditions above, they are related (CTA10/S676AL and S676CI).

Co-transferred company

The restrictions in CTA10/PART14/CHAPTER2A, CHAPTER2C and CHAPTER2E operate to restrict relief in certain situations involving co-transferred companies as well as companies that have themselves been transferred through a change in ownership (CTA10/S676AA, S676CB and S676EC).

A co-transferred company is any company that was related to the transferred company both immediately before and immediately after the change in ownership.

In practice, a co-transferred company will also be a transferred company. The term is required to prevent certain surrenders of losses as group relief for carried-forward losses from one transferred company to another, in situations involving a major change in the business of a transferred company or a transfer of trade.