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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
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Restrictions: pre-entry loss: time-apportionment: no gain/loss xfers

Time-apportionment extends back through any unbroken sequence of no gain/no loss disposals which involves any interest in the asset acquired by the company joining the group. Time-apportionment may therefore extend back before a disposal which is not a no gain/no loss disposal if that disposal is a part-disposal.

Example

In 1990, LS acquires an asset in a transaction which is not a no gain/no loss transaction.

In 1991, LS makes a part-disposal to an unconnected third party and realises a chargeable gain.

In 1992, LS disposes of the remainder of the asset at no gain/no loss to LT, and there is a later no gain/no loss disposal to LV, which brings the asset into the M group. LV subsequently disposes of the asset at a loss.

Time-apportionment runs from 1990, when LS acquired the asset. Time-apportionment therefore extends back before 1991, when LS realised a gain on a part-disposal of the asset.

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.

FA11/S46 and FA11/SCH11 greatly simplified the rules in TCGA92/SCH7A for the deduction of losses on or after 19 July 2011. See CG47400+ for guidance on loss streaming from that date.