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HMRC internal manual

Capital Gains Manual

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

TCGA92/S184E(7) to (9) deal with other cases where a pre-change asset has been disposed of, other than to another member of the same group of companies under TCGA92/S171, in circumstances where the disposal does not result in the immediate recognition of a gain or loss for tax purposes. There are various deferral or roll over provisions providing a relief for particular transactions that are identified in TCGA92/S184E(9). In each case the intention is that a gain or loss that would otherwise have arisen on the disposal of an asset that was a pre-change asset is tracked through to a subsequent event where that gain or loss is wholly or partly recognised, so that the gain on the replacement asset is treated in the same way as a gain on a pre-change asset.

TCGA92/S184E(7) provides the basic premise, where there is a ‘relevant deferral provision’ (see below) the application of which means that a gain or loss is not recognised on the occasion of a disposal of a pre-change asset, but will be recognised on some subsequent occasion either in the company itself, or in another company.

TCGA92/S184E(8) requires that part of a gain or loss which arises on the subsequent occasion is to be treated as a gain or loss on the disposal of a pre-change asset, to the extent that any previous gain or loss on a disposal of a pre-change asset has been deferred.

The ‘relevant deferral provisions’ to which TCGA92/S184E(7) and (8) apply are

  • a demerger of part or all of a company’s business to another company in return for an issue of shares to the shareholder (TCGA92/S139)
  • the transfer of a trade carried on outside the UK by a UK company to a non-UK company in exchange for shares (TCGA92/S140)
  • transfers of a trade conducted in the UK to another company resident in a different EU member state under the EU merger directive (TCGA92/S140A)
  • transfers of assets to a Societas Europea (TCGA92/S140E)
  • the rollover of a gain under the provisions of TCGA92/S152 and S153, and
  • the postponement of a charge on a deemed disposal on the migration of a company (TCGA92/S187).