Peter Vaines turns the spotlight on trading losses, unlawful dividends… and deep gains
Where a company transfers its trade to another company, s 343 of the Taxes Act 1988 allows the successor company to be treated as continuing carrying on the same trade and to benefit from the accumulated trading losses. However, s 343 requires there to be at least 75% common ownership of the companies before and after the transfer and that the successor company actually carries on the relevant trade.
The recent case of Barkers of Malton Limited v HMRC SpC 689 was concerned with the application of s 343 and it was agreed that all the relevant conditions were satisfied —except one. The only question for consideration was whether or not the successor company continued to carry on the trade in question.
The background is not really important, but the business had been failing and needed to be separated from a valuable property, so the trade was transferred to a subsidiary and then on to another company. Unfortunately, the first transfer took place at 9am and the second transfer took place at
