Introduction Background
12.This section is one of three that seek to close existing loopholes in the loss rules.
13.This is the first of two that specifically deal with Part 14.
14.The purpose of Part 14 is to counter loss buying by restricting relief for carried forward CT losses across a change in ownership of a company. A change in ownership as defined at section 719; where, broadly, 51% of the company’s shares change hands.
15.Relief is restricted if the trade (Chapter 2), investment business (Chapter 3), property business (Chapter 5) carried on by a company undergoes a major change within 3 years of the change in ownership; or the change in ownership occurs after the company’s activities had revived after becoming small & negligible .
16.If there has been a major change following a change of ownership a company carrying on a trade or property business cannot use losses arising before the date of the change in ownership to set off against profits arising after the date of the change in ownership.
17.Slightly different rules apply to company’s carrying on investment businesses on a change in ownership. If any of the conditions are met the losses of the company are divided into those occurring before and after the date of the change in ownership. Any losses occurring before that date can not be set against profits arising after that date.
18.The restriction covers non trading loan deficits, non trading losses on intangible fixed assets, excess management expenses and UK property business losses