OT68070 - Transferable tax history - Onward sales - Effect of an onward sale on the new purchaser

The normal rules apply to the new purchaser in a TTH election as they do to any other purchaser (see OT63000). However, there are some modifications. The effect of these modifications depends on whether the default or opt-out treatment was followed. If the default treatment was followed, the tracked profits of all previous purchasers must be taken into account by the subsequent purchaser before the second purchaser can activate any TTH. Similarly decommissioning expenditure amounts (OT64030) allocated to previous purchasers are also taken into account by the subsequent purchaser in calculating what TTH can be activated.

However, as explained at OT68020 original TTH amounts which have already been activated and against which losses have been set are not eligible for transfer under the onward sale, and so no account is taken of those tracked profits and decommissioning expenditure amounts.

Where an opt-out election is made, and only the original purchaser’s own eligible ring fence profits are transferred, the new purchaser does not need to take account of the original purchaser’s tracked profits in calculating whether TTH is activated. If some of the original TTH amount is transferred as a ’top-up’ to the original purchaser’s eligible ring fence profits, then in calculating whether that TTH is activated, the new purchaser need only account for the original purchaser’s tracked profits for periods from which an amount of eligible ring fence profits was transferred (see example at OT68050).