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Transfers of trade, loss relief and post cessation income

Question

We act for an insolvent company which has £1m of trading losses carried forward. As part of a restructuring exercise the trade is to be transferred to a related non-group company. What happens to the above losses and how can they be utilised going forward?

Answer

ICTA 1988 s 343 has been rewritten to CTA 2010 Part 22 (ss 940A onwards) and deals specifically with transfers of trades without a change in ownership.

The rules apply where the so-called ownership and tax conditions are met as set out below. However the first point to note is that these provisions are mandatory so no election is required; indeed their origins are anti-avoidance to counteract artificial cessations of trade which could have resulted...

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