Introduction

It is often necessary to transfer a trade between companies under common ownership before or after a company sale or acquisition, or as part of a general group restructuring operation.

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 as 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'.

The rules apply where one company owns at least 75% of another or both companies are under the 75% common ownership of the same person or persons - a person can in this situation either be a company or an individual. The rules are compulsory where the conditions are met.

Ownership

It is extremely important to consider the ownership test carefully, as if this test is not met the transfer is ineffective for the purpose of the succession rules.

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