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HMRC internal manual

Capital Gains Manual

Groups: loss restriction by reference to capital allowances

TCGA92/S41 (3) does not refer to ICTA88/S343, which gives continuity of treatment for capital allowances (and other) purposes where the transfer of a trade from one company to another satisfies a 75 per cent common ownership test. For this situation there are additional rules restricting capital losses in TCGA92/S41(8). These rules extend TCGA92/S41 in relation to the following transfers.

  • An intra-group transfer at no gain/no loss under TCGA92/S171 (1), or a transfer to which no gain/no loss treatment would have applied but for the exclusions in TCGA92/S171 (2).
  • A transfer of a UK trade between companies resident in different EU member states in exchange for shares or securities, see CG45705+.

The general effect of these rules is that a loss restriction by reference to capital allowances can take account of capital allowances given to previous holders of the asset through any unbroken series of transfers covered by the provisions specified.

For disposals before 1 April 2000, the provisions of TCGA92/S174 (1) - (3) applied, rather than TCGA92/S41 (8), with the same result.