Transfer of a trade

Produced by a Tolley Corporation Tax expert

Corporation Tax

Guidance

It is often necessary to transfer a trade between companies under common ownership without a change in ownership before or after a company sale or acquisition, or as part of a general group restructuring operation. See the Preparing group for sale or acquisition for a discussion as to why this may be the case.

What are the succession to trade rules?

The succession to trade rules enable trades to be transferred under common 75% ownership with the ability to carry forward tax losses into the successor company and a tax-neutral transfer for capital allowances purposes. The transfer of a trade between group members is commonly also referred to as a ‘hive down’, ‘hive up’ or ‘hive across’, depending upon the group structure in question.

Without rules to the contrary, the trade would be treated as permanently ceased in the transferor company, resulting in losses being lost and balancing adjustments in the capital allowances pools. The succession to trade rules only apply to transfers between companies and not to an individual or partnership comprised of individuals.

The

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