CTM80180 | Groups: group relief: arrangements, effect 3

CTA10/S154(3) effect 3

Effect 3 in CTA10/S154(3) is that there are arrangements in place of any kind (whether or not in writing) whereby a third company could begin to carry on the whole or part of a trade which, at any time in that accounting period, is carried on by one of the companies. The third company could do so either as a:

• successor of that company, or

• successor of another company that is not a third company but which, at some time during or after the end of that accounting period, has begun to carry on the whole or part of that trade.

This is subject to exclusions for certain commercial arrangements as set out in CTA10/Ss155A and 155B (CTM80181), and to the definition of arrangements in CTA10/S156(2)(b) (CTM80165)

‘Successor’

One company is a successor of another if it carries on, in whole or in part, a trade which the other company has ceased to carry on in certain circumstances where a balancing charge would not be chargeable on the ceasing company – CTA10/S156(3). The circumstances are where:

• CTA10/Part 22/Chapter 1 (transfers of trade without a change of ownership) applies in relation to the companies as, respectively, the successor and the predecessor within the meaning of that Chapter, or

• the two companies are connected with each other in accordance with CTA10/S1122.

‘Third company’ (CTA10/S154(4))

This means a company which, ignoring the effect of any arrangements is not a member of the same group as the company in CTA10/S154 to which the arrangements refer.