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CTA10/S941

CTA10/S940A applies where there is a transfer of a trade (or part-trade) and the companies concerned are in common ownership.

CTA10/S941 defines a test of common ownership between the predecessor and successor companies in terms of ownership of the transferred trade. CTA10/S942 (1) extends this to the ownership of the ordinary share capital (defined at CTA10/S1119) of the companies concerned. »Ê¹ÚÌåÓýapp requisite degree of common ownership is 75 per cent. Tests of ownership and CTA10/S942 are dealt with at CTM06020.

If the conditions at CTA10/S940C (a) and (b) are met then CTA10/S944 applies, modifying the normal cessation and commencement rules (CTM06110).

75 per cent test

CTA10/S941 provides that there is common ownership of a trade if the same person or persons owned at least 75 per cent of the trade both:

• at some time within one year before the transfer of the trade, and
• on or at any time within two years after that transfer.

CTA10/S941 does not lay down any minimum period throughout which the predecessor and successor companies must be in common ownership. »Ê¹ÚÌåÓýappre is guidance on this at CTM06210.

For the guidance on the interpretation of ‘persons� for the purposes of CTA10/S940A, see CTM06020.

Company must be within charge to CT

CTA10/S943 contains the condition that throughout the period defined in CTA10/S941 (1) the trade must have been carried on by a company or companies within the charge to CT.

This definition brings within the scope of CTA10/S940A companies that are:

• non-resident, and
• chargeable to CT in respect of a trade carried on in the UK through a branch or agency.

»Ê¹ÚÌåÓýappre is guidance on non-resident companies generally at CTM34200+.

Part trades

»Ê¹ÚÌåÓýapp common ownership test is defined in terms of a trade. »Ê¹ÚÌåÓýapp same rules apply when only partof a trade is transferred - see in particular CTM06060, CTM06120 and CTM06130.