Corporation Tax Act 2010 section 955

Transfer of activities on part cessation of trade

Section 955 deals with anti-avoidance rules that apply when a company ceases part of its trade and transfers those activities to another company, where the main purpose is to obtain a capital allowances balancing allowance.

• Where a company (the predecessor) stops carrying on part of a trade and another company (the successor) takes over those activities, and the main purpose of the arrangement is to secure a balancing allowance under the Capital Allowances Act 2001, special rules apply to redirect allowances and charges to the successor.
• The part of the trade that ceased is treated as a deemed separate trade, and the successor steps into the predecessor's shoes for capital allowance purposes, as though it had always carried on that trade.
• The transfer of assets from the predecessor to the successor, where those assets are in use for the deemed separate trade, does not itself trigger any capital allowances or balancing charges.
• These rules do not apply where the successor company is a dual resident investing company, as defined in section 949 of the Act.