Section 194 — Corporation Tax Act 2009: Transfer of rights if transferee does not carry on trade

Transfer of rights if transferee does not carry on trade 194 1 This section applies if—

a a company (“ the transferor ”) permanently ceases to carry on a trade, b the transferor transfers to another person (“ the transferee ”) for value the right to receive sums arising from the carrying on of the trade, and c the transferee does not subsequently carry on the trade.

2 The transferor is treated as receiving a post-cessation receipt.

3 The amount of the receipt is—

a the amount or value of the consideration for the transfer, if the transfer is at arm's length, or b the value of the rights transferred as between parties at arm's length, if the transfer is not at arm's length.

4 Any sums mentioned in subsection (1)(b) which are received after the cessation of the trade are not post-cessation receipts.

5 This section is subject to section 195 (transfer of trading stock).