CTM06010 - Corporation Tax: company reconstructions: common ownership
ICTA88/S343 (1), (1)(a), & (1)(b)
Section 343 applies where there is a transfer of a trade (or
part-trade) and the companies concerned are in common ownership.
Section 343 (1) defines a test of common ownership between
the predecessor and successor companies in terms of ownership of
the transferred trade. ICTA88/S344 (2) extends this to the
ownership of the ordinary share capital (defined in ICTA88/S832) of
the companies concerned. The requisite degree of common ownership
is 75%. Tests of ownership and ICTA88/S344 are dealt with at
CTM06020.
If the conditions at Section 343 (1)(a) & (1)(b) are met
then subsections (2) to (5) of Section 343 apply, modifying the
normal cessation and commencement rules (
CTM06110).
75% test
Section 343 (1)(a) provides that there is common ownership of a trade if the same person or persons owned at least 75% of the trade both:
- at some time within one year before the transfer of the trade, and
- on or at any time within two years after that transfer.
Section 343 does not lay down any minimum period throughout
which the predecessor and successor companies must be in common
ownership. There is guidance on this at
CTM06210.
For the guidance on the interpretation of
‘persons’ for the purposes of ICTA88/S343, see
CTM06020.
Company must be within charge to CT
Section 343 (1)(b) contains the condition that throughout the
period defined in subsection (1)(a) the trade must have been
carried on by a company or companies within the charge to CT.
This definition brings within the scope of Section 343
companies that are:
- non-resident, and
- chargeable to CT in respect of a trade carried on in the UK through a branch or agency.
There is guidance on non-resident companies generally at CTM34200 onwards.
Part Trades
The common ownership test is defined in terms of a trade. Note that the same rules apply when only part of a trade is transferred - see in particular CTM06060, CTM06120 and CTM06130.
