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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Restrictions: pre-entry loss: time-apportionment

Where the asset had been transferred intra-group before it was brought into the relevant group, TCGA92/SCH7A/PARA2 (5) will backdate the relevant pre-entry date - that is, the date the expenditure is treated as having been incurred - to the acquisition by the first transferor in the no gain/no loss sequence, see CG47628+. So the combined effect of subparagraphs (5), (6A), and (6B) is to ensure that the time-apportionment formula applies to the whole period from first acquisition, to the loss disposal.

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.