Corporation Tax Act 2010

954 Transfer of activities on complete cessation of trade U.K.

(1) This section applies (subject to section 957(1)) if—

(a) a company (“the predecessor”) ceases to carry on a trade,

(b) another company (“the successor”) begins to carry on the activities of that trade as its trade or as part of its trade,

(c) the successor is not a dual resident investing company,

(d) in the accounting period in which the predecessor ceases to carry on the trade the predecessor would (apart from this section) be entitled under Part 2 of CAA 2001 (plant and machinery allowances) to a balancing allowance in respect of the trade, and

(e) the predecessor's ceasing to carry on the trade is part of a scheme or arrangement the main purpose, or one of the main purposes, of which is to entitle the predecessor to that balancing allowance.

(2) CAA 2001 has effect subject to subsections (3) to (5).

(3) Any allowances or charges are to be made to or on the successor if such allowances or charges would have been made to or on the predecessor had the predecessor continued to carry on the trade.

(4) A transfer of assets from the predecessor to the successor does not of itself give rise to any allowances or charges if—

(a) the transfer of the assets is made on the transfer of the trade, and

(b) the assets are in use for the purposes of that trade.

(5) For the purpose of determining the amount of the allowances or charges mentioned in subsection (3) to be made to the successor—

(a) the successor is to be treated as if it has been carrying on the trade since the predecessor began to do so, and

(b) anything done to or by the predecessor is to be treated as having been done to or by the successor.

(6) If the successor carries on the activities of the trade as part of its trade, that part is to be treated for the purposes of subsections (3) to (5) as a separate trade carried on by the successor.

(7) In subsection (1)(c) “dual resident investing company” has the same meaning as in section 949 (with references in that section to the “transfer accounting period” construed as references to the accounting period of the successor in which it begins to carry on the activities of the trade as mentioned in subsection (1)(b) above).