Corporation Tax Act 2009 section 1120B

Enterprise treated as an SME where acquired by an SME

Section 1120B provides that an enterprise which fails to qualify as a small or medium-sized enterprise (SME) only because of an oversized partner or linked enterprise can be treated as an SME for the full accounting period in which it is acquired by an SME.

• At the start of the accounting period, the enterprise (E) was not classified as an SME solely because a related partner or linked enterprise exceeded the employee limit or either of the financial limits.
• During the accounting period, control of E was acquired by a company that was itself an SME at the time of acquisition.
• Where both conditions are met, E is treated as if it were an SME for the entire accounting period in which the acquisition takes place.
• "Control" for these purposes has the same meaning as in section 1124 of the Corporation Tax Act 2010.