Corporation Tax Act 2010 section 394A

Qualifying change of ownership

Section 394A defines what counts as a "qualifying change of ownership" for the purposes of the sale of lessors rules, and identifies certain exceptions where a change of ownership is disregarded.

• A qualifying change of ownership occurs when there is a relevant change in the relationship between a leasing company and its principal company on any given day.
• Three statutory exceptions can prevent a change from being treated as a qualifying change of ownership: certain intra-group reorganisations (section 395), unchanged consortium interests (section 396), and cases where an election has been made to opt out (section 398A).
• Where a qualifying change of ownership arises both from the normal ownership rules (sections 393 or 394) and from a company joining a tonnage tax group (section 394ZA), it is treated as arising solely from the tonnage tax group entry.
• These rules are central to determining whether the sale of lessors provisions are triggered, which can result in significant tax charges on companies involved in plant and machinery leasing.