Part 22Miscellaneous provisions

Chapter 1Transfers of trade without a change of ownership

Effect of Chapter in relation to transfers to which it applies

949Dual resident investing companies

1

Section 948(1) to (4) does not apply if the successor is a dual resident investing company in the transfer accounting period.

2

A company is a “dual resident investing company” in the transfer accounting period if the company—

a

is a dual resident company in that period (see subsection (3)), and

b

meets condition A, B or C (see subsections (4) to (6)).

3

A “dual resident company” is a company that is both UK resident and also within a charge to non-UK tax under the law of a territory because—

a

it derives its status as a company from that law,

b

its place of management is in that territory, or

c

it is for some other reason treated under that law as resident in that territory for the purposes of that tax.

4

Condition A is that the successor is not a trading company throughout the transfer accounting period.

5

Condition B is that in the transfer accounting period the successor carries on a trade of such a description that the company's main function, or one of its main functions, consists of one or more of the following activities.

  • Activity 1

    Acquiring and holding shares, securities or investments of any other kind (whether directly or indirectly).

  • Activity 2

    Making, under loan relationships, payments in relation to which debits fall to be brought into account for the purposes of Part 5 of CTA 2009.

  • Activity 3

    Making payments which are qualifying charitable donations.

  • Activity 4

    Making payments similar to those within Activity 3 but which are deductible in calculating the profits of the successor for corporation tax purposes.

  • Activity 5

    Obtaining funds for the purposes of, or otherwise in connection with, any of Activities 1 to 4.

6

Condition C is that in the transfer accounting period the successor carries on one or more of Activities 1 to 5—

a

to an extent that does not appear to be justified by any trade which it carries on, or

b

for a purpose that does not appear to be appropriate to any such trade.

7

In this section—

  • “non-UK tax” has the same meaning as in Part 5 (see section 187),

  • “trading company” means a company the business of which consists wholly or mainly in the carrying on of a trade or trades, and

  • “the transfer accounting period” means the accounting period of the successor in which the transfer of the transferred trade takes place.