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CRC v Leekes Ltd, Upper Tribunal (Tax and Chancery Chamber), 12 July 2016
Corporation tax losses on transfer of trade
L Ltd carried on a retail trade. It acquired the shares of C Ltd which carried on a similar business. The trade of C was transferred to L and its stores rebranded so that all of the stores traded under the L name. C had accumulated losses of about £3m. L claimed relief for those losses against the profits of its enlarged business in the year after acquisition. HMRC challenged the use of the losses. The First-tier Tribunal found in favour of the company and HMRC appealed .
The Upper Tribunal said the First-tier Tribunal had made an error when it decided that the successor should be treated as having incurred the losses transferred to it from C under TA 1988 s 343. That had led it to conclude that the transferred losses could be set against the entirety of L’s profit....
