Corporation Tax Act 2010 section 711

Conditions relating to company's trade or business

Section 711 sets out three conditions relating to a company's trade or business, at least one of which must be met before HMRC can recover unpaid corporation tax from a company following a change in ownership under section 710.

• Condition A applies where a company's trade or business activities ceased or became small or negligible within 3 years before the ownership change, with no significant revival before the change took place.
• Condition B applies where the company's trade or business activities ceased or became small or negligible after the ownership change, but under arrangements that were made before the change.
• Condition C applies where there was a major change in the nature or conduct of the company's trade or business within a 6-year window (starting 3 years before the ownership change), and that major change was caused by a transfer of the company's assets to persons who controlled the company or were connected with such persons.
• The definition of "transfer" is very broad and covers not just outright disposals but also lettings, hirings, grants of rights or licences, and the provision of business facilities in respect of the assets.