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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Targeted anti-loss buying rule - continuity of the rules

TCGA92/S184E(2) deals with cases of part disposals of assets when TCGA92/S184E (1) would deem the part disposed of not to be a pre-change asset. This provision ensures that the remaining part of the interest in the original asset that was a pre-change asset, is still a pre-change asset.

TCGA92/S184E (3) and (4) deal with cases where a company that had a qualifying change of ownership creates a new asset derived directly or indirectly from a pre-change asset, for example a new licence to exploit intellectual property where the intellectual property was a pre-change asset. It is necessary that the value of the new asset derives substantially from the value of the old asset. This provision ensures that such new assets are also regarded as pre-change assets, notwithstanding that the new asset did not exist at the time of the qualifying change of ownership. TCGA92/S184E(4) gives examples of when the value of the new asset is derived from another asset for the purposes of TCGA92/S184E(3), but the operation of TCGA92/S184E(3) is not limited to these examples.

Where the pre-change asset was a holding of shares or securities and there has been a scheme of re-organisation, reconstruction or conversion affecting the holding that is within TCGA92/S116 (see CG51700+), TCGA92/S184E(5) ensures the new asset is also regarded as a pre-change asset.

TCGA92/S184E(6) provides a similar rule in relation to new holdings acquired under a scheme of reorganisation or reduction in share capital of a company within TCGA92/S127 to 131 where the original shares were pre-change assets. The new holding will be a pre-change asset.