Major Change in Ownership of Company Flashcards
When has there been a change in ownership of a company
If within a three year period;
1 single person acquires more than 50% of the share capital of a company
If two or more persons acquires at least a 5% shareholding and together this equates to more than 50% of the share capital
If a company acquires shares in one company and that company becomes a member of the same group
Under what circumstance is it not classed as a change in ownership
Acquisition of shares under a will
Unsolicited gift of shares
When is it a major change in the nature or conduct of trade
Major change in Property/ Services/ Facilities provided
Major change in customers/ outlets or markets
What changes can management make to the loss making company according to HMRC
-Keep up with technology
-New management techniques
Improvement in efficiency of company
Rationalisation (dropping unprofitable product line)
Ordinary decisions a prudent business man would make
Under what other circumstance do anti avoidance rules apply
If a company buy another company which has small or negligible trade.
The activities in the bought company are so small that it can’t really be understood why the company bought that company other than to utilise losses
What is the effect of the anti avoidance provision (trade)
Losses cfwd can not be off set against profit arising after the change in ownership
Losses can not be carried back to offsef against profit that arose prior to the change in ownership.
When is there a major change in the nature or conduct of business
A major change in the nature or conduct of any trade or business carried on by the company
A major change in the scale of any trade/ business carried on by the company
Beginning or ceases to carry on a particular trade/ business
What period is under review for major changes to trade
Has there been a 5 year period where there has been not major change in trade
3yr …………………change…………………………….5yrs
What period is under review for major changes to business for trading losses
Has there been a 5 year period where there has been not major change in business
3yr …………………change…………………………….5yrs
What period is under review for major changes to business for other losses
Has there been a major change in business in the period
3yr …………………change…………………………….5yrs
What is the effect of the anti avoidance provision (business)
Any affected profits that arise in the 5 year period from the end of the accounting year in which the change of ownership took place cannot be off set by the losses cfwd.
When must the change in ownership and change in business have taken place and why
After the 01/04/2017 because losses after 01/04/2017 can be offset against total profits.
What are the anti avoidance provisions for.
To stop a company buying another company simply to utilise there losses.
