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HMRC internal manual

Capital Gains Manual

Capital loss streaming from 19 July 2011: qualifying corporate bonds


The special rule in TCGA92/SCH7A/PARA7(6) allows a restricted loss to be set off against a gain accruing on the disposal of qualifying corporate bonds (QCBs), if the QCBs were acquired after the company with losses joined the group on a reorganisation in respect of assets held at the time it joined. This is achieved through a deeming provision.


  • a chargeable gain accrues under TCGA92/S116(10) on the disposal of a QCB, and
  • the QCB was not held by the company with restricted losses at the time it joined the group, and
  • the whole or any part of the asset which is the old asset for TCGA92/S116 purposes was held by that company when it joined the group

the holding of QCBs is treated as a pre-entry asset to the extent that the original shares involved in the reorganisation were pre-entry assets. The rule prescribes no apportionment method. HMRC will accept any reasonable method of apportionment consistent with the result that restricted losses are only set off against gains relating to assets involved in the reorganisation which were held by the company when it joined the group.

Detailed instructions on the QCB provisions are at CG53709+.

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.