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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Groups: rebasing: no gain/no loss disposals: elections out of kink test

TCGA92/SCH3/PARA2

It is possible to have a group in which some companies are covered by an election outof the kink test and others are not. Without a special rule it would be possible forgroups to exploit this situation, for example, by transferring an asset from a companywithout an election to a company with an election as a preliminary to a disposal to anunconnected third party. The rule which counters this is TCGA92/SCH3/PARA2. The rule onlyapplies to disposals at no gain/no loss under

  • TCGA92/S171 (1) (intra-group asset transfers, see CG45305+)
  • TCGA92/S58 (husband and wife or civil partners).

It does not apply to any of the other no gain/no loss provisions. The followinginstructions describe the effects for companies. The references to no gain/no lossdisposals are restricted to disposals under Section 171(1).