Corporation Tax Act 2010 section 950

Transfers of trades involving business of leasing plant or machinery

Section 950 restricts the normal tax-neutral treatment of trade transfers where the transferred trade involves a business of leasing plant or machinery, imposing additional conditions that must be met to preserve continuity.

• Where both predecessor and successor carry on the trade outside a partnership, the normal continuity treatment only applies if the principal companies remain the same before and after the transfer, and any consortium ownership proportions are unchanged.
• Continuity is also denied if, on or before the transfer day, there has been a relevant change in the relationship between the successor and a principal company — for example, through the successor joining a tonnage tax group.
• Where the trade is carried on in partnership, the normal continuity treatment only applies if the predecessor ceases its entire trade and that trade is a plant or machinery leasing business conducted in partnership on the transfer day.
• If continuity is denied, the plant or machinery is treated as sold on the transfer day at the higher of its ascribed value immediately before the transfer or the disposal value that would need to be brought into account under capital allowances legislation.