Corporation Tax Act 2010 section 676

Company reconstructions

Section 676 deals with how restrictions on trading loss relief following a change in company ownership interact with trade transfers that qualify as company reconstructions without a change of ownership.

• Where a trade was transferred to the company before the change in ownership under a qualifying reconstruction, the company is treated as having carried on the predecessor's trade and sustained the predecessor's losses for the purposes of applying the loss restriction rules.
• Where the company transfers its trade to a successor company after the change in ownership under a qualifying reconstruction, the loss restriction rules apply as though the company's trade included the trade as carried on by the successor.
• The rules cover carry-forward of trading losses under sections 45, 45A, 45B, 303B, 303C and 303D, as well as any relief passed to a successor company through the reconstruction provisions.
• Predecessor and successor relationships can be traced through chains of qualifying reconstructions, so indirect links through intermediate companies are caught.