Corporation Tax Act 2010 section 942

Options that may be applied for the purposes of the ownership condition

Section 942 sets out three alternative methods (options) for determining who is treated as owning an interest in a trade, for the purpose of deciding whether the ownership condition in section 941 is satisfied when a trade is transferred without a change of ownership.

• Option 1 attributes the interest in the trade to the ordinary shareholders of the trading company, in proportion to their shareholdings.
• Option 2 applies where the trading company is a 75% subsidiary, allowing the interest to be attributed either to the parent company itself or to the parent company's ordinary shareholders in proportion to their holdings.
• Option 3 applies where a person has management control over a company to which an interest in the trade can be attributed under Option 1 or Option 2; in that case the interest is instead treated as belonging to that controlling person.
• Throughout these rules, ownership means beneficial ownership, and where a company owns shares indirectly (through one or more other companies), its indirect holdings are taken into account using the calculation rules in sections 1155 to 1157.