CTM06745 | Corporation Tax: loss buying: major change in the business of a transferred company: introduction

CTA10/PART14/CHAPTER2A

CTA10/PART14/CHAPTER2A restricts relief for losses and other amounts carried forward, in a situation where there has been a change in both the ownership and the business of a company.

The way the restriction operates in summary is as follows. This summary should be read alongside the rest of the guidance in this section for a full understanding of the rules.

• Both the change in ownership and the change in the business must occur on or after 1 April 2017;

• The change in the business must be a major change;

• The change in the business must occur within a required period - in general, the restriction does not apply if the change in the business occurs more than three years before or five years after the change in ownership;

• Where these conditions are met, the company cannot set certain carried forward losses incurred before the change in ownership against its affected profits - broadly, the affected profits are profits that relate to the major change in the business and arise during the first five years following the change in ownership;

• In addition, the company is prevented from bringing into account certain debits relating to periods before the change in ownership, beyond a limited amount - this applies indefinitely, without reference to the company's affected profits.