Corporation Tax Act 2010 section 676ED

Indirect transfers of a trade

Section 676ED deals with situations where a trade that was originally transferred by a transferred company or co-transferred company is subsequently passed on again, either directly or as part of a larger composite trade, and ensures the original company is still treated as the transferor for the purposes of the demerger rules.

• Where a trade is subsequently transferred to another company, the original transferring company (the transferred or co-transferred company) is treated as having transferred the trade directly to that other company at the time of the actual subsequent transfer.
• Where the activities of the original trade have been absorbed into a larger "composite trade" which is then transferred onwards, the original company is likewise treated as having transferred its original trade directly to the receiving company at the time of the composite trade transfer.
• In both cases, if the actual onward transfer qualifies under Chapter 1 of Part 22 (which deals with transfers of trade without a change in ownership), the deemed direct transfer is also treated as qualifying under those same rules.
• These provisions ensure that the demerger rules in Chapter 2E continue to track the ultimate destination of the trade, regardless of intermediate steps or merging of trade activities along the way.