658 Meaning of “community amateur sports club” and “registered club”
(1) A club is entitled to be registered as a community amateur sports club if conditions A, B and C are met.
(1A) Condition A is that the club is, and is required by its constitution to be, a club which—
(a) is open to the whole community (see section 659),
(b) is organised on an amateur basis (see section 660), and
(c) has as its main purpose the provision of facilities for, and the promotion of participation in, one or more eligible sports (see sections 660A and 661).
(1B) Condition B is that the club meets—
(a) the location condition (see section 661A), and
(b) the management condition (see section 661B).
(1C) Condition C is that the club meets the income condition (see section 661CA).
(2) A club may apply to an officer of Revenue and Customs to be registered as a community amateur sports club.
(3) The officer must register the club as a community amateur sports club if satisfied that the club is entitled to be registered.
(4) The officer—
(a) may register the club with effect from such date as the officer may specify (which may be before the date of the application), and
(b) may cancel the club's registration with effect from such date as the officer may specify (which may be before the date of the decision to cancel it) if no longer satisfied that the club is entitled to be registered.
(5) Her Majesty's Revenue and Customs may publish the names and addresses of registered clubs.
(6) In this Chapter a “registered club” means a club which is for the time being registered as a community amateur sports club under this section.
(1) A club is “open to the whole community” for the purposes of section 658 if—
(a) its membership is open to all without discrimination,
(b) its facilities are available to members without discrimination, and
(c) the costs associated with membership of the club for any year do not represent a significant obstacle to membership of the club, use of its facilities or full participation in its activities (see subsection (2A)).
(2) For the purposes of this section “discrimination” includes indirect discrimination and (in particular) includes discrimination on the grounds of—
(a) ethnicity or nationality,
(b) religion or beliefs,
(c) sexual orientation, or
(d) sex, age or disability (except as a necessary consequence of the requirements of a particular sport).
(2A) For the purposes of subsection (1)(c) the costs associated with membership of a club for any year represent a significant obstacle to membership of the club, use of its facilities or full participation in its activities if—
(a) those costs exceed the amount specified for the year for the purposes of this subsection in regulations made by the Treasury, and
(b) the club has not made such arrangements as are necessary to secure that those costs do not represent such an obstacle.
(2B) The Treasury may by regulations make provision supplementing subsection (2A), including—
(a) provision as to what constitutes full participation in a club's activities;
(b) provision as to costs that are, or are not, to be regarded as the costs associated with membership of a club;
(c) provision about calculating the amount of the costs associated with membership of a club for any year.
(2C) The provision that may be made by regulations under this section includes—
(a) different provision for different purposes, and
(b) provision having effect in relation to times before the regulations are made.
(2D) Section 1171(4) (orders and regulations subject to negative resolution procedure) does not apply to any regulations made under this section if a draft of the statutory instrument containing them has been laid before, and approved by a resolution of, the House of Commons.
(3) A club is not prevented from being “ open to the whole community ” for the purposes of section 658 merely because it charges different fees for different descriptions of person.
(1) A club is “organised on an amateur basis” for the purposes of section 658 if—
(a) it is non-profit making (see subsections (2) and (3)),
(b) it provides for members and their guests only the ordinary benefits of an amateur sports club (see subsections (4) and (5)), ...
(ba) it does not exceed the limit on paid players (see subsection (5A)), and
(c) its constitution provides for any net assets on its dissolution to be applied for approved sporting or charitable purposes (see subsections (6) and (7)).
(2) A club is “non-profit making” for the purposes of subsection (1) if its constitution —
(a) requires any surplus income or surplus gains to be reinvested in the club, and
(b) does not allow the distribution of any of its assets (in cash or in kind) to members or third parties.
(3) A club is not prevented from being “non-profit making” for those purposes merely because it makes donations to charities or registered clubs.
(4) The following are “the ordinary benefits of an amateur sports club” for the purposes of subsection (1)—
(a) the provision of sporting facilities,
(b) the reasonable provision and maintenance of club-owned sports equipment,
(c) the provision of suitably qualified coaches,
(d) the provision, or reimbursement of the costs, of coaching courses,
(e) the provision of insurance cover,
(f) the provision of medical treatment,
(g) the reimbursement of necessary and reasonable travel or subsistence expenses incurred by players, match officials, coaches, first-aiders and accompanying individuals in connection with away matches,
(h) the reasonable provision of post-match refreshments for players and match officials, and
(i) the sale or supply of food or drink as a social benefit which arises incidentally from the sporting purposes of the club.
(4A) In subsection (4)(g)—
(a) “subsistence expenses” means expenses on food, drink and temporary living accommodation,
(b) an “accompanying individual” means an individual accompanying a person who—
(i) has a disability for the purposes of the Equality Act 2010, and
(ii) is a player or match official.
(5) A club is not prevented from providing for members and their guests only the ordinary benefits of an amateur sports club for the purposes of subsection (1) merely because—
(a) a member supplies goods or services to the club on an arm's length basis, or
(b) the club employs members of the club on an arm's length basis.
(5A) A club does not exceed the limit on paid players for the purposes of subsection (1) if—
(a) the number of persons paid to play for the club does not at any time exceed the specified maximum,
(b) the number of such persons in any year does not exceed the specified maximum for that year,
(c) the amount paid to any such person in any year in respect of activities undertaken for the club does not exceed the specified maximum for that year, and
(d) the total amount paid to such persons in any year in respect of activities undertaken for the club does not exceed the specified maximum for that year.
“ Specified ” means specified in regulations made by the Treasury.
(5B) The Treasury may by regulations make provision supplementing subsection (5A), including—
(a) provision as when a person is, or is not, to be regarded as a person paid to play for a club, and
(b) provision about calculating for the purposes of subsection (5A) the amount paid to such a person.
(6) In relation to any club, the following are “sporting or charitable purposes” for the purposes of subsection (1)—
(a) the purposes of the governing body of an eligible sport for the purposes of which the club existed, for use in related community sport,
(b) the purposes of another registered club, and
(c) the purposes of a charity.
(7) Purposes of a club are “approved” sporting or charitable purposes for the purposes of subsection (1) if they are approved by—
(a) the members of the club in general meeting, or
(b) the members of the club's governing body.
(8) The Treasury may by regulations make further provision as to when a club is “ organised on an amateur basis ” for the purposes of section 658.
(9) The provision that may be made by regulations under subsection (8) includes—
(a) provision as to the conditions which a club must meet in order to be “ organised on an amateur basis ” for the purposes of section 658;
(b) provision as to what are, or are not, to be regarded as “ ordinary benefits of an amateur sports club ” for the purposes of subsection (1);
(c) provision about persons who are, or are not, to be regarded as guests of a member of a club for the purposes of subsection (1).
(10) Regulations made under subsection (8) may amend this section or make other amendments to this Chapter.
(11) A statutory instrument that contains (whether alone or with other provisions) regulations under subsection (8) that amend this section or make other amendments to this Chapter may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.
(12) The provision that may be made by regulations under this section includes—
(a) different provision for different purposes, and
(b) provision having effect in relation to times before the regulations are made.
(13) Section 1171(4) (orders and regulations subject to negative resolution procedure) does not apply to any regulations made under this section if a draft of the statutory instrument containing them has been laid before, and approved by a resolution of, the House of Commons.
(1) A club is not to be regarded as a club that has as its main purpose the provision of facilities for, and the promotion of participation in, one or more eligible sports if the percentage of its members who are social members exceeds the percentage specified for the purposes of this section in regulations made by the Treasury.
(2) A member is a “ social member ” for the purposes of this section if the member does not participate, or participates only occasionally, in the sporting activities of the club.
(3) The Treasury may by regulations make provision—
(a) as to activities that are, or are not, to be regarded as “sporting activities” of a club;
(b) as to the circumstances in which a member of a club is, or is not, to be regarded as participating in the sporting activities of the club;
(c) as to the circumstances in which a member of a club is, or is not, to be regarded as participating only occasionally in those activities.
(4) The provision that may be made by regulations under this section includes—
(a) different provision for different purposes, and
(b) provision having effect in relation to times before the regulations are made.
(5) Section 1171(4) (orders and regulations subject to negative resolution procedure) does not apply to any regulations made under this section if a draft of the statutory instrument containing them has been laid before, and approved by a resolution of, the House of Commons.
661 Meaning of “eligible sport”, “qualifying purposes” etc
(1) For the purposes of this Chapter “eligible sport” means a sport which is designated for those purposes by an order made by the Treasury.
(2) An order under this section may designate a sport by reference to its inclusion in a list maintained by a body specified in the order.
(3) For the purposes of this Chapter “qualifying purposes” means—
(a) the purpose of providing facilities for one or more eligible sports, and
(b) the purpose of promoting participation in one or more eligible sports.
(4) For the purposes of this Chapter “non-qualifying purposes” means purposes which are not qualifying purposes.
(5) For the purposes of this Chapter “non-qualifying expenditure” means expenditure which is incurred for non-qualifying purposes.
(1) A club meets the location condition for the purposes of section 658 if—
(a) it is established in the United Kingdom ..., and
(b) the facilities that it provides for eligible sports are all located in the United Kingdom ....
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) A club meets the management condition for the purposes of section 658 if its managers are fit and proper persons to be managers of the club.
(2) In this paragraph “ managers ”, in relation to a club, means the persons having the general control and management of the administration of the club.
661C Periods over which management condition treated as met
(1) This paragraph applies in relation to any period throughout which the management condition is not met.
(2) The management condition is treated as met throughout the period if the Commissioners for Her Majesty's Revenue and Customs consider that—
(a) the failure to meet the management condition has not prejudiced the purposes of the club, or
(b) it is just and reasonable in all the circumstances for the condition to be treated as met throughout the period.
(1) A club meets the income condition for the purposes of section 658 if the sum of—
(a) the receipts brought into account in calculating the club’s trading income (“trading receipts”), and
(b) the receipts brought into account in calculating the club’s property income (“property receipts”),
does not exceed the relevant threshold.
(2) For the purposes of subsection (1), any exemption under section 662 (exemption for UK trading income) or 663 (exemption for UK property income) is to be ignored.
(3) For the purposes of subsection (1), if in an accounting period (“period A”) a club becomes, or ceases to be, registered then—
(a) the part of period A in which the club is registered is to be treated as a separate accounting period from the remainder of that period, and
(b) the club’s trading receipts and property receipts for period A must be apportioned between those periods.
(4) In this section—
“property income” means income of a UK property business or an overseas property business,
“the relevant threshold” means—
£100,000 in the case of an accounting period which is 12 months, and
a proportionally reduced amount in the case of a shorter accounting period, and
“trading income” means profits which, if chargeable to corporation tax, would be chargeable under Chapter 2 of Part 3 of CTA 2009 and are—
profits of a trade, or
profits of an activity other than a trade,
whether or not that trade or activity is carried on wholly or partly in the United Kingdom.
661D Tax treatment of gifts qualifying for gift aid relief
(1) This section applies if a gift is made to a registered club by an individual and the gift is a qualifying donation for the purposes of Chapter 2 of Part 8 of ITA 2007 (gift aid).
(2) The club is treated as receiving, under deduction of income tax at the basic rate for the tax year in which the gift is made, a gift of an amount equal to the grossed up amount of the gift.
(3) The income tax treated as deducted is treated as income tax paid by the club.
(4) The grossed up amount of the gift is treated as an amount in respect of which the club is chargeable to corporation tax, under the charge to corporation tax on income.
But this is subject to section 664 (exemption for interest and gift aid income).
(5) References in this section to the grossed up amount of the gift are to the amount of the gift grossed up by reference to the basic rate for the tax year in which the gift is made.
661E Tax treatment of gifts of money from companies
If a registered club receives a gift of a sum of money from a company which is not a charity, the gift is treated as an amount in respect of which the registered club is chargeable to corporation tax, under the charge to corporation tax on income.
(1) A club which is a registered club throughout an accounting period may make a claim for its UK trading income for that period to be exempt from corporation tax if conditions A and B are met.
(2) Condition A is that the receipts which would (but for this section) be brought into account in calculating the club's UK trading income for that period do not exceed the relevant threshold.
(3) Condition B is that the whole of its UK trading income for that period is applied for qualifying purposes.
(4) If a club is a registered club for only part of an accounting period, this section has effect as if—
(a) that part were a separate accounting period, and
(b) the club's UK trading income and receipts for that separate accounting period were proportionately reduced.
(5) In this section “the relevant threshold” means—
(a) £50,000 in the case of an accounting period which is 12 months, and
(b) a proportionately reduced figure in the case of a shorter accounting period.
(5A) The Treasury may by order amend the figure for the time being specified as the relevant threshold in subsection (5)(a).
(5B) A statutory instrument containing an order under subsection (5A) that amends that figure so as to substitute a lower figure may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.
(6) In this section “UK trading income” means profits that (apart from this section) are chargeable under Chapter 2 of Part 3 of CTA 2009 and are—
(a) profits of a trade carried on wholly or partly in the United Kingdom, or
(b) profits of an activity other than a trade.
(1) A club which is a registered club throughout an accounting period may make a claim for its UK property income for that period to be exempt from corporation tax if conditions A and B are met.
(2) Condition A is that the receipts which would (but for this section) be brought into account in calculating the club's UK property income for that period do not exceed the relevant threshold.
(3) Condition B is that the whole of its UK property income for that period is applied for qualifying purposes.
(4) If a club is a registered club for only part of an accounting period, this section has effect as if—
(a) that part were a separate accounting period, and
(b) the club's UK property income and receipts for that separate accounting period were proportionately reduced.
(5) In this section “the relevant threshold” means—
(a) £30,000 in the case of an accounting period which is 12 months, and
(b) a proportionately reduced figure in the case of a shorter accounting period.
(5A) The Treasury may by order amend the figure for the time being specified as the relevant threshold in subsection (5)(a).
(5B) A statutory instrument containing an order under subsection (5A) that amends that figure so as to substitute a lower figure may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.
(6) In this section “UK property income” means income of a UK property business which would (but for this section) be chargeable under Chapter 3 of Part 4 of CTA 2009.
664 Exemption for interest , gift aid and company gift income
(1) A club which is a registered club throughout an accounting period may make a claim for—
(a) its interest income for that period, ...
(b) its gift aid income for that period, and
(c) its company gift income for that period,
to be exempt from corporation tax if the whole of that interest income , gift aid income and company gift income is applied for qualifying purposes.
(2) If a club is a registered club for only part of an accounting period, this section has effect as if—
(a) that part were a separate accounting period, and
(b) the club's interest income for that separate accounting period were proportionately reduced.
(3) In this section—
“company gift income”, in relation to a club, means gifts of money made to the club by companies which are not charities,
“interest income”, in relation to a club, means interest arising to the club that is not brought into account under section 297 of CTA 2009 (trading credits and debits brought into account under Part 3 of that Act as trading income), and
“gift aid income”, in relation to a club, means gifts made by individuals to the club which are qualifying donations for the purposes of Chapter 2 of Part 8 of ITA 2007 (gift aid).
A registered club to which a gain accrues may make a claim for the gain not to be a chargeable gain for the purposes of TCGA 1992 if the whole of it is applied for qualifying purposes.
665A Claims in relation to interest , gift aid and company gift income
(1) This section applies to—
(a) claims for repayment of income tax treated as having been paid by virtue of section 661D (tax treatment of gifts qualifying for gift aid relief),
(b) claims for amounts to be exempt from tax by virtue of section 664 (exemption for interest , gift aid and company gift income), and
(c) claims for repayment of income tax deducted at source from interest income (within the meaning of that section) which is exempt from tax by virtue of that section.
(2) A claim to which this section applies may be made—
(a) to an officer of Revenue and Customs, or
(b) by being included in the claimant's company tax return.
(3) In this section—
“ free-standing claim ” means a claim made as mentioned in subsection (2)(a), and
“ tax return claim ” means a claim made as mentioned in subsection (2)(b).
(4) The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision—
(a) limiting the number of free-standing claims that may be made by a person in a tax year, or
(b) requiring a claim for an amount below an amount specified in the regulations to be made as a tax return claim.
(5) The regulations may make different provision for different cases or purposes.
666 Exemptions reduced if non-qualifying expenditure incurred
(1) This section applies if—
(a) a registered club has relevant income or relevant gains for an accounting period (“the accounting period in question”), and
(b) the club incurs non-qualifying expenditure in that period.
(2) For the purposes of this section—
“relevant income”, in relation to an accounting period, means income which is exempt under this Chapter for that period (ignoring the effect of the following provisions of this section),
“relevant gains”, in relation to an accounting period, means gains which are not chargeable gains under this Chapter for the purposes of TCGA 1992 for that period (ignoring the effect of the following provisions of this section), and
“income receipts and chargeable gains”, in relation to an accounting period, means the sum of the club's income receipts for that period (whether or not chargeable to tax) and its chargeable gains for the purposes of TCGA 1992 for that period (ignoring the effect of section 665).
(3) If the amount of the non-qualifying expenditure in the accounting period in question is less than the amount of the income receipts and chargeable gains for that period, there is a reduction in the amount of relief given under this Chapter.
(4) The total amount of the relevant income and relevant gains for that period exempted under this Chapter is reduced by the amount found by the appropriate fraction.
(5) This is the appropriate fraction—
R
I
R
G
×
N
Q
E
I
R
C
G
where—
“RIRG” means the total amount of the relevant income and relevant gains for that period,
“NQE” means the amount of the non-qualifying expenditure in that period, and
“IRCG” means the income receipts and chargeable gains for that period.
(6) If the amount of the non-qualifying expenditure in the accounting period in question is at least equal to the amount of the income receipts and chargeable gains for that period, the exemptions under this Chapter—
(a) do not apply, and
(b) are treated as never having applied,
to any of the relevant income or relevant gains for that period.
(7) If the amount of the non-qualifying expenditure in the accounting period in question is greater than the amount of the income receipts and chargeable gains for that period, there is a reduction in the amount of relief given under this Chapter for previous accounting periods.
(8) The total amount of the relevant income and relevant gains for previous accounting periods exempted under this Chapter is reduced (but not below nil) by the surplus amount.
(9) The surplus amount is the amount by which the amount found by the appropriate fraction exceeds the total amount of the relevant income and relevant gains for the accounting period in question.
667 Rules for attributing surplus amount to earlier periods etc
(1) This section supplements section 666.
(2) An amount exempted under this Chapter for an earlier accounting period is reduced by the surplus amount only if that earlier accounting period ends not more than 6 years before the end of the accounting period in question.
(3) If the condition in subsection (2) is met in the case of more than one earlier accounting period, amounts exempted under this Chapter for later accounting periods are reduced in priority to earlier ones.
(4) If an amount exempted under this Chapter has been reduced under section 666 in respect of non-qualifying expenditure incurred in an accounting period, it may not be reduced again under that section in respect of non-qualifying expenditure incurred in a later accounting period.
(5) Such adjustments must be made (whether by way of the making of assessments or otherwise) as may be required in consequence of section 666(7).
(1) A registered club may specify the income and gains to be reduced (in whole or in part) as a result of section 666.
(2) A specification under subsection (1) is made by notice to an officer of Revenue and Customs.
(3) Subsection (5) applies if—
(a) an officer of Revenue and Customs requires the club to make a specification under this section, and
(b) the club has not given notice under subsection (2) of the specification before the end of the required period.
(4) The required period is 30 days beginning with the day on which the officer made the requirement.
(5) An officer of Revenue and Customs may determine the income and gains to be reduced (in whole or in part).
669 Asset ceasing to be held for qualifying purposes etc
(1) This section applies if a club holds any asset (within the meaning of TCGA 1992) and, without disposing of it (within the meaning of that Act)—
(a) the club ceases to be a registered club, or
(b) the club ceases to hold the asset for qualifying purposes.
(2) The club is treated for the purposes of TCGA 1992 as disposing of, and immediately reacquiring, the asset at the time of the cessation for a consideration equal to its market value at that time.
(3) The exemption under section 665 does not apply to any gain accruing on that deemed disposal.
(4) So far as any of the asset represents (directly or indirectly) the consideration for a disposal of any other asset by the club, the exemption under that section does not apply, and is treated as never having applied, to any gain accruing on that disposal of that other asset.
(5) Such adjustments must be made (whether by way of the making of assessments or otherwise) as may be required in consequence of this section.
(6) But an assessment in respect of a chargeable gain accruing as a result of this section may not be made more than 3 years after the end of the accounting period in which the cessation in question occurred.
An officer of Revenue and Customs must notify the club of any decision—
(a) to register it as a registered club,
(b) to refuse to register it as a registered club, or
(c) to cancel its registration.
(1) A club may appeal against a decision of any officer of Revenue and Customs in relation to its application, or registration, as a registered club.
(2) Notice of the appeal must be given in writing to an officer of Revenue and Customs within 30 days of the date of the notification under section 670.
(3) The notice must specify the grounds of the appeal.
(4) If the appeal is against a refusal to register the club, or a decision to register it with effect from a particular date, the tribunal may (if not dismissing the appeal)—
(a) direct that the club is to be registered with effect from a specified date, or
(b) send the matter back to any officer of Revenue and Customs for reconsideration.
(5) If the appeal is against a decision to cancel the registration of the club, or to do so with effect from a particular date, the tribunal may (if not dismissing the appeal)—
(a) revoke the cancellation,
(b) direct that the cancellation is to have effect from a specified date, or
(c) send the matter back to any officer of Revenue and Customs for reconsideration.
(6) The provisions of TMA 1970 relating to appeals under the Taxes Acts (within the meaning of TMA 1970) apply to an appeal under this section as they apply to those appeals.
(1) Chapter 2 restricts relief for trading losses in some cases where there is a change in the ownership of a company.
(1A) Chapter 2A restricts relief in some further cases involving a change in the company's activities.
(1B) Chapter 2B restricts relief for trading losses in some cases involving the transfer of an asset.
(1C) Chapters 2C and 2D restrict group relief for carried-forward losses in some cases.
(1D) Chapter 2E restricts relief for trading losses in some cases involving the transfer of a trade.
(2) Chapters 3 and 4 restrict relief in some cases where there is a change in the ownership of a company with investment business.
(3) Chapter 5 restricts relief for property losses in some cases where there is a change in the ownership of a company without investment business.
(3A) Chapter 5A restricts relief for certain non-trading deficits and losses where there is a change of ownership of a shell company.
(4) Chapter 6 enables unpaid corporation tax to be recovered from a linked person in some cases where there is a change in the ownership of a company.
(5) Chapter 8 contains supplementary provision.
(6) See also Chapter 7 of Part 22 (recovery of unpaid corporation tax due from non-UK resident company).
(7) For the meaning of—
(a) “change in the ownership of a company”, see Chapter 7,
(b) “company with investment business”, see section 729, ...
(ba) shell company”, see section 705A, and
(c) “linked” person, see section 706.
(1) This Chapter applies if—
(a) there is a change in the ownership of a company (“the company”), and
(b) condition A or B is met.
(2) Condition A is that within any period beginning no more than 3 years before the change in ownership occurs which is a period of 5 years in which that change occurs there is a major change in the nature or conduct of a trade carried on by the company.
(3) Condition B is that the change in ownership occurs at any time after the scale of the activities in a trade carried on by the company has become small or negligible and before any significant revival of the trade.
(4) In this section “major change in the nature or conduct of a trade” includes—
(a) a major change in the type of property dealt in, or services or facilities provided in, the trade, or
(b) a major change in customers, outlets or markets of the trade.
This Chapter applies even if the change is the result of a gradual process which began before the period of 5 years mentioned in subsection (2).
(5) In this Chapter—
“the change in ownership” means the change in ownership mentioned in subsection (1),
“the company” has the same meaning as in this section, and
“trade” includes an office.
(1) In calculating the company's taxable total profits of an accounting period beginning before the change in ownership, no relief may be given under section 37 or 42 (relief for trade losses) for a loss made by the company in an accounting period ending after the change in ownership.
(2) No relief may be given under section 45, 45B, 303B or 303D for a loss made by the company in an accounting period beginning before the change in ownership by carrying forward the loss to reduce the profits of a trade of an accounting period ending after the change in ownership.
(2A) No relief may be given under section 45A or 303C for a loss made by the company in an accounting period beginning before the change in ownership by carrying forward the loss and deducting it from a company's total profits of an accounting period ending after the change in ownership.
(3) For the purposes of this section and section 675—
(a) the accounting period in which the change in ownership occurs is treated as two separate accounting periods, the first ending with the change and the second consisting of the remainder of the period, and
(b) the profits or losses of the accounting period are apportioned to the two periods.
(4) The apportionment under subsection (3)(b) is to be made on a time basis according to the respective lengths of the two periods.
(5) But if that method of apportionment would work unjustly or unreasonably in any case, such other method is to be used as is just and reasonable.
(6) In subsection (2), “profits of a trade” includes interest or dividends treated as profits of a trade under section 46.
674A Section 674: exception for certain losses of ring fence trade
(1) Section 674 does not prevent relief being given for a loss if—
(a) the loss is made in a ring fence trade,
(b) the loss is not a non-decommissioning loss,
(c) it is condition A in section 673 that is met, and
(d) the major change by reference to which that condition is met did not occur within a period of 3 years in which the change in ownership occurred.
(2) In this section—
“non-decommissioning loss” is to be interpreted in accordance with section 303A;
“ring fence trade” has the same meaning as in Part 8 (see section 277).
675 Disallowance of trading losses: calculation of balancing charges
(1) The following provisions apply if relief in respect of the company's losses is restricted because of section 674(2).
(2) In applying the provisions of CAA 2001 about balancing charges to the company by reference to any event after the change in ownership, there is to be disregarded any allowance falling to be made in taxing the company's trade for any accounting period beginning before the change in ownership.
This subsection applies despite section 577(3) of CAA 2001.
(3) But subsection (2) does not apply if the allowance has been given effect to by means of relief against any profits of that accounting period or any subsequent accounting period beginning before the change in ownership.
(4) For the purposes of subsection (3), it is to be assumed that any loss attributable to any such allowance as is mentioned in subsection (2) is relieved before any loss which is not attributable to such an allowance.
(1) Subsection (2) applies if, before the change in ownership—
(a) a trade carried on by another company (“the predecessor company”) is transferred to the company, and
(b) the transfer is a transfer to which Chapter 1 of Part 22 applies (transfers of trade without a change of ownership).
(2) In determining any relief available to the company by virtue of Chapter 1 of Part 22, this Chapter applies as if—
(a) references to a trade carried on by the company included the trade as carried on by the predecessor company or by any predecessor of that company, and
(b) any loss sustained by the predecessor company or any predecessor of that company had been sustained by the company.
(3) Subsection (4) applies if, after the change in ownership—
(a) a trade carried on by the company is transferred to another company (“the successor company”), and
(b) the transfer is a transfer to which Chapter 1 of Part 22 applies.
(4) In determining—
(a) any relief available to the company under section 45, 45A, 45B, 303B, 303C or 303D (carry forward of trading losses), or
(b) any relief available to the successor company or any successor of that company by virtue of section Chapter 1 of Part 22,
this Chapter applies as if references to a trade carried on by the company included the trade as carried on by the successor company or by any successor of that company.
(5) For the purposes of this section a company (“company A”) is a predecessor of another company (“company B”), and company B is a successor of company A, if the first or second condition is met.
(6) The first condition is that Chapter 1 of Part 22 applies in relation to company A and company B as respectively the predecessor and the successor within the meaning of that Chapter.
(7) The second condition is that—
(a) Chapter 1 of Part 22 applies in relation to company A and a third company (“company C”) as respectively the predecessor and the successor within the meaning of that Chapter, and
(b) company C is (whether by virtue of the first condition or this condition) a predecessor of company B.
(1) This Chapter applies if conditions 1 and 2 are met.
(2) Condition 1 is that on or after 1 April 2017 there is a change in the ownership of a company (“the transferred company”).
(3) Condition 2 is that a major change in the business of the transferred company or a co-transferred company occurs within the required period but not before 1 April 2017.
(4) The required period is—
(a) for the purposes of section 676AF, any period beginning no more than 3 years before the change in ownership occurs which is a period of 5 years in which that change occurs,
(b) for the purposes of sections 676AG to 676AK, the period of 8 years beginning 3 years before the change in ownership.
(5) In this Chapter—
“the change in ownership” means the change in ownership mentioned in subsection (2);
“the transferred company” has the meaning given by subsection (2);
“trade” includes an office.
676AB Priority of provisions of Chapters 2 and 3 over this Chapter
(1) If and so far as —
(a) a relevant provision of this Chapter, and
(b) a relevant provision of Chapter 2 or 3,
would each (if the other provision were ignored) apply in relation to the same loss or other amount, the relevant provision of this Chapter does not apply in relation to that amount.
(2) In this section “relevant provision”—
(a) in relation to this Chapter means any of the provisions of sections 676AF to 676AK;
(b) in relation to Chapters 2 and 3 means any of the provisions of sections 674 and 679 to 683.
(1) In this Chapter references to a “major change in the business” of a company include—
(a) a major change in the nature or conduct of any trade or business carried on by the company,
(b) a major change in the scale of any trade or business carried on by the company, and
(c) beginning or ceasing to carry on a particular trade or business.
(2) In subsection (1) the reference to a major change in the “nature or conduct” of a trade or business includes—
(a) a major change in the type of property dealt in, or services or facilities provided in, the trade or business concerned,
(b) a major change in customers, outlets or markets of the trade or business concerned,
(c) a major change in the nature of the investments held by the company for the purposes of an investment business.
(3) The definitions in subsections (1) and (2) apply even if the change is the result of a gradual process which began before the period of 5 years mentioned in section 676AA(4)(a) or (as the case may be) the period of 8 years mentioned in section 676AA(4)(b).
(4) Where the condition in subsection (5) is met in the case of any two companies, the transfer of a trade or business, or any property, from one of them to the other is to be disregarded in determining for the purposes of section 676AA(3) whether or not there is a major change in the business of either of those companies.
(5) The condition is that the companies are related to one another both—
(a) immediately before the change in ownership, and
(b) at the time of the transfer mentioned in subsection (4).
676AD Notional split of accounting period in which change in ownership occurs
(1) This section applies for the purposes of this Chapter.
(2) The accounting period in which the change in ownership occurs (“the actual accounting period”) is treated as two separate accounting periods (“notional accounting periods”), the first ending with the change and the second consisting of the remainder of the period.
(3) Section 685 (apportionment of amounts) applies for the purposes of this Chapter as it applies for the purposes of Chapter 3.
(4) The amounts for the actual accounting period in column 1 of the table in section 685(2) are apportioned to the two notional accounting periods in accordance with section 685.
(5) In this Chapter, and in sections 685 and 686 as they apply by virtue of subsection (3), “the actual accounting period” and “notional accounting periods” have the same meaning as in this section.
(1) This section has effect for the purposes of this Chapter.
(2) Profits of an accounting period ending after the change in ownership are “affected profits” if and so far as—
(a) they arise before the 5th anniversary of the end of the accounting period of the transferred company in which the change in ownership occurs, and
(b) they can fairly and reasonably be attributed to activities, or other sources of income, as a result of which, or partly as a result of which, the major change referred to in section 676AA(3) has occurred.
(3) If an accounting period of the company begins before, and ends after, the anniversary mentioned in subsection (2), then for the purposes of that subsection—
(a) the accounting period is treated as two separate accounting periods, the first ending with that date and the second consisting of the remainder of the period, and
(b) the profits or losses of the accounting period are apportioned to the two periods.
(4) Any apportionment under subsection (3)(b) is to be made on a time basis according to the respective lengths of the two deemed accounting periods.
(5) But if that method of apportionment would work unjustly or unreasonably in any case, such other method is to be used as is just and reasonable.
676AF Restriction on use of carried-forward post-1 April 2017 trade losses
(1) A loss made by the transferred company in an accounting period beginning before the change in ownership may not be deducted from affected profits of an accounting period ending after the change in ownership under any of the following provisions—
(a) section 45A(5) (carry-forward of post-1 April 2017 trade losses),
(b) section 45F(3) (carried-forward losses: terminal relief),
(c) section 303C(3) (excess carried-forward non-decommissioning losses of ring fence trade), and
(d) section 124B(3) of FA 2012 (excess carried-forward BLAGAB trade losses).
(2) A loss made by another company (“the predecessor company”) in an accounting period beginning before the change in ownership may not be deducted from affected profits of an accounting period ending after the change in ownership under any of the provisions mentioned in paragraphs (a) to (c) of subsection (1) (as applied by virtue of Chapter 1 of Part 22 (transfers of trades)).
676AG Restriction on debits to be brought into account
(1) This section has effect for the purpose of restricting the debits to be brought into account for the purposes of Part 5 of CTA 2009 (loan relationships) in respect of the transferred company's loan relationships.
(2) The debits to be brought into account for the purposes of Part 5 of CTA 2009 for—
(a) the accounting period beginning immediately after the change in ownership, or
(b) any subsequent accounting period,
do not include relevant non-trading debits so far as amount A exceeds amount B.
(3) Amount A is the sum of—
(a) the amount of those relevant non-trading debits, and
(b) the amount of any relevant non-trading debits which have been brought into account for the purposes of that Part for any previous accounting period ending after the change in ownership.
(4) Amount B is the amount of the taxable total profits of the accounting period ending with the change in ownership.
(5) For the meaning of “relevant non-trading debit”, see section 730.
676AH Restriction on the carry forward of post-1 April 2017 non-trading deficit from loan relationships
(1) This section has effect for the purpose of restricting the carry forward under Chapter 16A of Part 5 of CTA 2009 (non-trading deficits: post 1 April 2017 deficits) of a pre-acquisition non-trading deficit from the transferred company's loan relationships.
(2) For the purposes of this section an amount is a “pre-acquisition” non-trading deficit from a company's loan relationships if it is a non-trading deficit from the company's loan relationships for an accounting period beginning before the change in ownership.
(3) Subsection (4) applies if, in the case of a pre-acquisition non-trading deficit from the transferred company's loan relationships, the non-trading deficit in column 1 of row 4 of the table in section 685(2) is apportioned in accordance with section 685(2) to the first notional accounting period.
(4) None of that deficit may, by virtue of section 463G (carry forward of unrelieved deficit), be set off against affected profits of—
(a) the accounting period beginning immediately after the change in ownership, or
(b) any subsequent accounting period.
676AI Restriction on relief for post-1 April 2017 non-trading loss on intangible fixed assets
(1) This section has effect for the purpose of restricting relief under section 753 of CTA 2009 (treatment of non-trading losses) in respect of a relevant non-trading loss on intangible fixed assets.
(2) An amount is a “relevant non-trading loss on intangible fixed assets” if and so far as—
(a) it is by virtue of section 751 of CTA 2009 a non-trading loss on intangible fixed assets for a relevant pre-acquisition accounting period, or
(b) it is made up of an amount falling within paragraph (a) which has been carried forward under section 753(3) of CTA 2009.
(3) “Relevant pre-acquisition accounting period” means an accounting period beginning—
(a) before the change in ownership, and
(b) on or after 1 April 2017.
(4) In the case of a relevant non-trading loss on intangible fixed assets, relief under section 753 of CTA 2009 against the total profits of the actual accounting period is available only in relation to each of the notional accounting periods considered separately.
(5) A relevant non-trading loss on intangible fixed assets may not be deducted as a result of section 753(3) of CTA 2009 (losses carried forward) from affected profits of an accounting period ending after the change in ownership.
676AJ Restriction on deduction of post-1 April 2017 expenses of management
(1) This section has effect for the purpose of restricting deductions for post-1 April 2017 relevant expenses of management of the transferred company.
(2) Any amounts which—
(a) are, or are treated as, expenses of management referable to the actual accounting period, and
(b) are apportioned to either of the two notional accounting periods in accordance with section 685,
are treated for the purposes of Chapter 2 of Part 16 of CTA 2009 (companies with investment business) as expenses of management referable to that notional accounting period.
(3) Any allowances which are apportioned to either of the notional accounting periods in accordance with section 685 are treated for the purposes of section 253 of CAA 2001 and section 1233 of CTA 2009 (companies with investment business: excess capital allowances) as falling to be made in that notional accounting period.
(4) In calculating the taxable total profits of an accounting period of the transferred company ending after the change in ownership—
(a) relevant expenses of management, and
(b) relevant allowances,
may not be deducted from affected profits of the accounting period.
(5) In this section “relevant expenses of management” means expenses of management which are first deductible under section 1219 of CTA 2009 for an accounting period beginning—
(a) on or after 1 April 2017, and
(b) before the change in ownership.
(6) In this section “relevant allowances” means allowances falling to be made for an accounting period beginning—
(a) on or after 1 April 2017, and
(b) before the change in ownership.
676AK Restriction on use of post-1 April 2017 UK property business losses
(1) This section has effect for the purpose of restricting relief under sections 62 and 63 for a relevant UK property business loss made by the transferred company.
(2) In this section “relevant UK property business loss” means a loss made in a UK property business in an accounting period beginning—
(a) on or after 1 April 2017, and
(b) before the change in ownership.
(3) In relation to a relevant UK property business loss, relief under section 62(3) is available only in relation to each of the notional accounting periods considered separately.
(4) A relevant UK property business loss may not be deducted as a result of section 62(5) or 63(3) from affected profits of an accounting period ending after the change in ownership.
676AL “Co-transferred company” and “related company”
(1) In this Chapter “co-transferred company” means any company which is related to the transferred company both immediately before and immediately after the change in ownership.
(2) For the purposes of this Chapter any two companies (“T”) and (“C”) are “related” to one another at any time when—
(a) the group condition is met in relation to T and C, or
(b) any of consortium conditions 1 to 4 is met in relation to T and C,
(whether on the assumption that T is the claimant company and C is the surrendering company or vice versa).
(3) In this Chapter—
“consortium condition 1” is to be interpreted in accordance with section 188CF,
“consortium condition 2” is to be interpreted in accordance with section 188CG,
“consortium condition 3” is to be interpreted in accordance with section 188CH,
“consortium condition 4” is to be interpreted in accordance with section 188CI,
“the group condition” is to be interpreted in accordance with section 188CE.