Taxes Consolidation Act 1997 Schedule 18A paragraph 4

Change of a company's nature

Schedule 18A, paragraph 4 is an anti-avoidance rule that restricts the use of pre-entry losses under paragraph 3 where, around the time a company joins a group, there is a major change in the nature or conduct of its trade.

• Where a company joins a group and, within a three-year window, there is a major change in the nature or conduct of its trade — or its trade was small or negligible before joining and has not yet revived — the pre-entry trade is disregarded for the purposes of paragraph 3.
• A "major change" includes changes in the type of property dealt in, services or facilities provided, customers, markets, or outlets, and applies even where the change results from a gradual process that began outside the three-year period.
• The practical effect is that allowable losses incurred before the company joined the group cannot be set against chargeable gains of other group members arising after the date of entry.
• Where the relevant change occurs after the company joins the group but within three years of joining, Revenue may raise an assessment within six years of the date of the change.