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HMRC internal manual

Capital Gains Manual

Rebasing to 31/3/82: elections: avoidance

Type of avoidance
Whose election covers the disposal

Type of avoidance

It would be easy to arrange disposals between members of a group of companies to take advantage of these rules. If one company had made an election and another had not then assets could be transferred between them as necessary prior to disposal so that loss producing assets suffered no restriction (election made) while gains were restricted by reference to actual cost (no election made).

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Whose election covers the disposal

TCGA92/SCH3/PARA2, TCGA92/S58, TCGA92/S171

TCGA92/SCH3/PARA2 provides that when an asset is transferred on or after 6 April 1988 and the disposal is within TCGA92/S171; (intra-group transfers) thenany election made by the transferee will be ignored. The asset will be covered by the election or non-election of the transferor.

Where there is a series of such transfers the asset will be covered by the election or non-election made by the last person by whom the asset was acquired after 5 April 1988 otherwise than under Section 171, or if there is no such person, the person who held the asset on 5 April 1988.

Elections by subsequent transferees are ignored.