Corporation Tax Act 2010 section 723

Changes in indirect ownership

Section 723 extends the rules on changes in company ownership to capture indirect ownership changes, such as those occurring through group structures, by treating new owners as having acquired the relevant assets held by the company whose ownership has changed.

• When a company's ownership changes, the new owners are treated as having acquired the company's "relevant assets" (shares in other companies and certain equivalent property or rights) at the time of the change
• Where a single person gains control (condition A of section 719), they are treated as acquiring all relevant assets; where two or more persons are involved (conditions B or C), each is treated as acquiring a proportionate fraction based on their share of the ordinary share capital acquired
• The proportionate fraction is calculated as X divided by Y, where X is the percentage of ordinary share capital acquired by the individual person and Y is the total percentage acquired by all the relevant persons together
• This section can apply in a cascading manner — a deemed acquisition of shares in a subsidiary through this section can itself trigger a further change in ownership of that subsidiary, extending the rules down through a chain of companies