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HMRC internal manual

Capital Gains Manual

Migration of companies: recovery of postponed charges: example

The example at CG42410 shows how to calculate a postponed gain. This example follows on from that one to illustrate how a postponed gain may be brought back into charge in whole or in part. See CG42400 for guidance on the recovery of postponed gains.

In May 2006 B Ltd sells asset No 2. A gain is deemed to accrue to A Ltd at that time in the following amount

Postponed gain (£38,000) X postponed gain on asset No 2 (£8,000)
     
    aggregate of all gains on all relevant assets (£50,000)
    = £6,080

Postponed gains so far unreleased = £38,000 - £6,080 = £31,920

In June 2008 B Ltd sells asset No 3. A gain is deemed to accrue to A Ltd at that time in the following amount.

Postponed gain so far X postponed gain on asset No 3 (£32,000)
     
unrealised (£31,920)   aggregate of all postponed gains on all
    unrealised assets (Nos 1 and 3) (£42,000)
    = £24,320

Postponed gains so far unreleased = £31,920 - £24,320 + £7,600.

Note that if there is no disposal of asset No 1, or any disposal of shares in B Ltd by A Ltd, within 6 years of the relevant time the remaining part of the postponed gain is not recovered.