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Amendment of section 400 of Principal Act (company reconstructions without change of ownership)
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44. (1) Section 400 of the Principal Act is amended—
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(a) in subsection (6), by the insertion of “in respect of assets which have transferred from the predecessor to the successor on the transfer of the trade,” after “sections 307 and 308; but,”, and
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(b) by the insertion of the following subsection after subsection (7A):
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“(7B) (a) Where the trade consists of the carrying on of relevant activities (within the meaning of section 291A(5)(a))—
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(i) the predecessor shall not be entitled to any relief under section 291A(6)(b)(i) in respect of an excess amount (within the meaning of section 291A(6)(b)(i)), or portion thereof, as the case may be, which relates to a specified intangible asset which transferred from the predecessor to the successor on the transfer of the trade (in this subsection referred to as ‘the transferable excess amount’), and the successor shall be entitled to relief under section 291A(6)(b)(i) in respect of the transferable excess amount, for which the predecessor would have been entitled to claim relief if the predecessor had continued to carry on the trade, and
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(ii) the predecessor shall not be entitled to any relief under section 291A(6)(b)(ii) in respect of excess interest (within the meaning of section 291A(6)(b)(ii)), or portion thereof, as the case may be, which was incurred in connection with the provision of a specified intangible asset which transferred from the predecessor to the successor on the transfer of the trade (in this subsection referred to as ‘the transferable excess interest’), and the successor shall be entitled to relief under section 291A(6)(b)(ii) in respect of the transferable excess interest, for which the predecessor would have been entitled to claim relief if the predecessor had continued to carry on the trade.
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(b) (i) For the purposes of subparagraph (i) of paragraph (a), where an excess amount referred to in that subparagraph relates to both—
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(I) a specified intangible asset which transferred from the predecessor to the successor on the transfer of the trade, and
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(II) a specified intangible asset which did not so transfer,
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when determining the transferable excess amount, the excess amount shall be apportioned on a just and reasonable basis.
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(ii) For the purposes of subparagraph (ii) of paragraph (a), where excess interest referred to in that subparagraph was incurred in connection with both—
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(I) the provision of a specified intangible asset which transferred from the predecessor to the successor on the transfer of the trade, and
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(II) the provision of a specified intangible asset which did not so transfer,
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when determining the transferable excess interest, the excess interest shall be apportioned on a just and reasonable basis.”.
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(2) Subsection (1) shall have effect for accounting periods commencing on or after 1 January 2026 in respect of a transfer of a trade to which section 400(5) of the Principal Act applies which occurs on or after 1 January 2026.
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