Corporation Tax Act 2010 section 676AL

"Co-transferred company" and "related company"

Section 676AL defines what is meant by a "co-transferred company" and a "related company" for the purposes of the rules restricting the use of carried-forward losses following a change in company ownership.

• A "co-transferred company" is one that is related to the transferred company both immediately before and immediately after the change in ownership.
• Two companies are "related" if they satisfy the group condition or any of four consortium conditions, regardless of which company is treated as the claimant and which as the surrendering company.
• The group and consortium conditions use the same tests as those applying to group relief for carried-forward losses under Part 5A of the Act.
• Without these rules, pre-change losses could be surrendered to a co-transferred company whose trade is then expanded by the new owner specifically to absorb those losses.