Corporation Tax Act 2010 (c. 4)

Part 22 U.K. Miscellaneous provisions

Chapter 1 U.K. Transfers of trade without a change of ownership

Effect of Chapter in relation to transfers to which it applies U.K.

949 Dual resident investing companies U.K.

(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.