Corporation Tax Act 2010 section 714

The expectation condition

Section 714 sets out the "expectation condition" that must be met before HMRC can recover unpaid corporation tax from persons connected with a change in company ownership, as referred to in section 713.

• HMRC must be able to draw a reasonable inference from the terms and circumstances of transactions connected with the change in ownership that at least one party assumed any potential tax liability would go unpaid, in whole or in part.
• A "potential tax liability" is a corporation tax charge that would or might arise from an assessment made after the change in ownership on the company or any associated company, not necessarily a specific one.
• Circumstances are treated as "foreseeable" if they were reasonably predictable at the time of the ownership change, or if there was a reasonably foreseeable risk that they might occur.
• The meaning of a "transaction entered into in connection with a change in ownership" is defined separately in section 715.