»Ê¹ÚÌåÓýapp

»Ê¹ÚÌåÓýapp two essential elements of a loss-buying exercise are

• the purchase of a company with unused trading losses to carry forward, and
• reviving a dying trade with or without important changes made to the trading activity.

»Ê¹ÚÌåÓýapp reliefs for carried-forward losses affected are those under CTA10/S45, S45A, S45B, S303B, S303C and S303D.

It is recognised trades have to be flexible to keep up with market conditions and improve efficiency - see paragraphs 7 and 8 of SP10/91.  A new owner might be expected to assess the trade and bring in new ideas and people.  But if these changes go beyond organic development of the trade then CTA10/S673 may apply (CTM06370).

Although CTA10/S673 is anti-avoidance legislation, there is no motive or purpose test.  But all relevant factors should be considered in deciding whether to apply the legislation.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000).

As a major change in the nature or conduct of a trade can be established by reference to a period of up to five years after the date of change of ownership (three years for periods before 1 April 2017) it is helpful to review the accounts covering the whole of the relevant period.  CTA10/S727 provides a time limit for assessment of 6 years from the circumstance or event (within the 5 year window) which triggers the operation of CTA10/S673.  But this is subject to the following.

CT Pay and File periods

»Ê¹ÚÌåÓýappre may be discovery limitations by virtue of earlier agreements to set off pre-change of ownership losses against post change trading income.  For this reason, it may be appropriate to postpone agreement of any pre-change loss set off position for any open CTPF period where it is suspected at the time that it may be necessary to review the CTA10/S673 position in later periods.

CT Self Assessment periods

Officers should bear in mind enquiry window time limits and possible discovery limitations.