Single surviving trade

The taxpayer company ran out-of-town department stores. In November 2009 it bought the share capital of Coles a chain of furniture shops and warehousing facilities which had losses of £950 321 for 2009/10 as well as carried forward losses of £2.26m. Its business was hived up to the taxpayer and Coles became dormant.

The taxpayer refurbished the stores previously owned by Coles and rebranded them as its own.

Thee taxpayer offset Coles’ losses against its own trading profits in the corporation tax return for the year ended 31 March 2010 on the basis it had succeeded to Coles’ trade (TA 1988 s 343).

HMRC accepted there had been a succession but disallowed the losses saying they had to be matched to the trade to which the taxpayer had succeeded which was Coles’ trade only.

The taxpayer appealed.

The First-tier Tribunal said...