Corporation Tax Act 2010 section 41

Sections 39 and 40: transfers of trade to obtain relief

Section 41 is an anti-avoidance provision that prevents companies from exploiting the extended terminal loss relief rules in sections 39 and 40 by transferring trade activities to persons outside the corporation tax charge.

• The extended terminal loss relief under sections 39 and 40 is blocked where a trade cessation is part of an avoidance arrangement
• The restriction applies where, on cessation, any of the trade's activities begin to be carried on by a person or persons not within the charge to corporation tax
• The cessation must be part of a scheme or arrangement where a main purpose is to secure the benefit of terminal loss relief under sections 39 or 40
• Both conditions — transfer to a non-corporation-tax-chargeable person and an avoidance purpose — must be met for the restriction to apply