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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Options: abandonment: assets to be used for trade purposes

TCGA92/S144 (4)(c)

TCGA92/S144 (4)(c) provides that the abandonment of an option to purchase assets to be used for the purposes of a trade carried on by the acquirer constitutes a disposal and so may give rise to an allowable loss. By TCGA92/S146 (1)(c) such an option is not to be treated as a wasting asset, see CG12330.

It may be that an option is abandoned before the acquirer has started to carry on a trade. Section 144(4) (c) does not specifically refer to ‘a trade to be carried on’ but it may be accepted that Section 144(4) (c) extends to cases where

  • a trade was commenced by the acquirer shortly after the abandonment of the option, and
  • the available evidence clearly indicates that the option concerned was to acquire assets with the intention of using them, if acquired, for the purposes of that trade.