Section 266 | Election where predecessor and successor are connected persons

(1)This section applies if a person (“the successor”) succeeds to a qualifying activity which was until that time carried on by another person (“the predecessor”) and—

(a)the two persons are connected with each other,

(b)each of them is within the charge to tax on the profits of the qualifying activity, and

(c)the successor is not a dual resident investing company.

(2)If this section applies, the predecessor and the successor may jointly elect for the provisions of section 267 to have effect.

(3)The election may be made whether or not any plant or machinery has actually been sold or transferred.

(4)The election must be made by notice to the an officer of Revenue and Customs within 2 years after the date on which the succession takes effect.^F1

(5)For the purposes of this section, the predecessor and the successor are connected with each other if any of the following conditions is met—

(a)they would be treated as connected persons under section 575;^F2

(b)one of them is a partnership and the other has the right to a share in that partnership;

(c)one of them is a body corporate and the other has control over that body;

(d)both of them are partnerships and another person has the right to a share in both of them;

(e)both of them are bodies corporate, or one of them is a partnership and the other is a body corporate, and (in either case) another person has control over both of them.

(6)In subsection (5) any reference to a right to a share in a partnership is to be read as a reference to a right to a share of the assets or income of the partnership.

(7)Sections 104E, 108 and 265 (disposal value in connection with special rate expenditure, effect of disposal to connected person on overseas leasing pool and general provisions about successions) do not apply if an election is made under this section (but see section 267A).^F3F4F5

(8)This section does not apply if section 561 applies (transfer or division of UK business).^F6