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HMRC internal manual

Capital Gains Manual

Capital loss streaming from 19 July 2011: realised losses: share reorganisations and insurance companies

Share reorganisations, TCGA92/SCH7A/PARA1(9)

If, on a share exchange or other reorganisation, a company issues securities which are capital gains exempt qualifying corporate bonds (QCBs), then TCGA92/S116 applies. The result is that a chargeable gain or allowable loss is computed at the time of the reorganisation, but is deferred, and crystallises for capital gains purposes on a disposal of the QCBs.

Where a reorganisation takes place before a company joins a group and the QCB disposal that crystallises the loss does not take place until afterwards, the loss is nonetheless treated as one that accrued at the time of the reorganisation for the purposes of TCGA92/SCH7A and is restricted.

Detailed guidance on QCBs can be found at CG53709+.

Insurance companies, TCGA92/SCH7A/PARA1(10)

TCGA92/S212 provides for an annual deemed disposal of certain life insurance company holdings in trusts and offshore funds. In determining whether a loss accruing to a company on a disposal under Section 212 is a loss which accrued before the company became a member of the relevant group, the spreading provisions in TCGA92/S213 are disregarded.

Note: Additional rules relating to loss buying were enacted in FA 2006. See CG47020+ for guidance on the rules which apply in priority to TCGA92/SCH7A for accounting periods ending on or after 5 December 2005.