Part 22

Miscellaneous provisions
Chapter 1

Transfers of trade without a change of ownership

Effect of Chapter in relation to transfers to which it applies

Rules for determining “L”
946
1
This section applies for the purposes of section 945(2) (determination of “L”).
2
A liability is to be ignored if—
a
the predecessor was the predecessor in relation to a transfer of a trade on a previous application of this Chapter, and
b
on that previous application of this Chapter the liability was apportioned under section 952 to a trade carried on by the company that was the successor on that application.
3
Subsection (4) applies if—
a
the predecessor transfers a liability to the successor, and
b
the creditor in question has agreed to accept settlement of part of the liability as settlement for the whole of it.
4
The transfer of the liability is taken to cover only the part of the liability mentioned in subsection (3)(b).
5
The predecessor's capital is to be treated as a liability of the predecessor so far as it is recently converted capital (but not otherwise).
6
For the purposes of subsection (5) a part of the predecessor's capital is recently converted capital if—
a
it was issued or otherwise originated on the conversion of a liability that was not part of the predecessor's capital or on the conversion of a part of that capital that was itself recently converted capital, and
b
the conversion occurred during the period of 12 months ending with the day on which the transfer of the transferred trade occurs.
7
In this section “the predecessor's capital” means the predecessor's share capital, share premium account, reserves and relevant loan stock.
8
In subsection (7) “relevant loan stock” means any loan stock or similar security (whether secured or unsecured) other than any to which subsection (9) applies.
9
This subsection applies to any stock or security if, when the liability giving rise to the stock or security was incurred, the person who was the creditor was carrying on a trade of lending money.
Pt. 22 Ch. 1 applied (with modifications) (14.7.2022) by Energy (Oil and Gas) Profits Levy Act 2022 (c. 40), Sch. 1 para. 19 (with ss. 15(1), 16(1), 17)
Pt. 22 Ch. 1 modified (15.5.2024) by S.I. 2009/2971, reg. 4(20) (as inserted by The Mutual Societies (Transfers of Business) (Tax) (Amendment) Regulations 2024 (S.I. 2024/555), regs. 1(1), 2(2)(c) (with reg. 1(2)-(5)))