Transfers of trade and reconstructions

Karen Bullen

Speed read

Where a trade is transferred from one company to another and at least a 75% interest in it belongs to the same person at some time in the year before the transfer and in the two years following the transfer and the trade is within the charge to UK tax throughout this time, then trading losses can be transferred with the trade. Capital allowances will be transferred with the trade and allowances for the year of transfer will be time apportioned. Stock will be transferred at the price paid unless it is transferred to someone not trading in the UK or a connected party, in which case OMV will apply. Connected parties can elect to have stock treated as transferred at the higher of cost and price received provided that market value is greater than both selling price and cost.

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