Corporation Tax Act 2010

Recovery of unpaid corporation tax for accounting period beginning before change

710 Recovery of unpaid corporation tax for accounting period beginning before change

(1) This section applies if an officer of Revenue and Customs considers that—

(a) there has been a change in the ownership of a company (“X”),

(b) any corporation tax assessed on X for an accounting period beginning before the change remains unpaid at any time more than 6 months after it was assessed, and

(c) any of conditions A to C in section 711 (conditions relating to company’s trade or business) is met.

(2) A person who is linked to X may be assessed by the officer and charged to an amount of corporation tax which does not exceed the amount remaining unpaid.

(3) A person assessed and charged under this section is to be assessed and charged in the name of X.

(4) An assessment under this section is not out of time if it is made within 3 years from the date of the final determination of the liability of X to corporation tax for the accounting period mentioned in subsection (1)(b).

711 Conditions relating to company’s trade or business

(1) The following are the conditions mentioned in section 710(1)(c).

(2) Condition A is that—

(a) in the period of 3 years before the change in the ownership of X, the activities of a trade or business of X cease or the scale of those activities becomes small or negligible, and

(b) there is no significant revival of those activities before the change occurs.

(3) Condition B is that after the change in the ownership of X, but under arrangements made before it, the activities of a trade or business of X cease or the scale of those activities becomes small or negligible.

(4) Condition C is that—

(a) there is a major change in the nature or conduct of a trade or business of X in the relevant 6 year period,

(b) a relevant transfer of assets of X occurs—

(i) in the period of 3 years before the change in the ownership of X, or

(ii) after the change but under arrangements made before it, and

(c) the major change mentioned in paragraph (a) is attributable to that transfer.

(5) In this section—

• “the relevant 6 year period” means the period of 6 years beginning 3 years before the change in the ownership of X,

• “relevant transfer”, in relation to assets of X, means a transfer of those assets—

  (a)

  to a person who had control of X at any time in the relevant period before the change in the ownership of X,

  (b)

  to a person connected with a person mentioned in paragraph (a), or

  (c)

  to a person under arrangements which enable any of those assets, or any assets representing those assets, to be transferred to a person mentioned in paragraph (a) or (b), and

• “transfer”, in relation to an asset, includes—

  (a)

  any disposal, letting or hiring of it,

  (b)

  any grant or transfer of any right, interest or licence in or over it, and

  (c)

  the giving of any business facilities with respect to it.

(6) For the meaning of “a major change in the nature or conduct of a trade or business”, see section 712.

712 Meaning of “a major change in the nature or conduct of a trade or business”

(1) This section applies for the purposes of section 711(4).

(2) “A major change in the nature or conduct of a trade or business” includes—

(a) a major change in the type of property dealt in, or services or facilities provided, in the trade or business,

(b) a major change in customers, outlets or markets of the trade or business,

(c) a change by which the company ceases to be a trading company and becomes an investment company,

(d) a change by which the company ceases to be an investment company and becomes a trading company, and

(e) if the company is an investment company, a major change in the nature of the investments held by the company.

(3) Any reference in subsection (2) to a change includes a change which is achieved gradually as a result of a series of transfers.

(4) In this section “trading company” means a company whose business consists wholly or mainly in the carrying on of a trade or trades.

(5) For the purposes of this section, a company is an investment company if—

(a) its business consists wholly or mainly in the making of investments, and

(b) the principal part of its income is derived from investments.

(6) But a company is not an investment company if its business consists wholly or mainly in the holding of shares or securities of companies—

(a) which are its 90% subsidiaries, and

(b) which are trading companies.