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HMRC internal manual

Capital Gains Manual

Restrictions: capital losses: time-apportionment: pooled assets


The time-apportionment formula applies to the notionally separate asset comprising the individual pre-entry assets identified with the disposal. Identification rules are therefore needed for the following purposes.

  • Where, before the asset pool came into the group, there were acquisitions at different times and one or more disposals out of the pool, identification rules are necessary to establish the cost and date of acquisition of the assets comprising the pool at the time of entry.
  • Where a disposal of the whole or part of a pooled asset cannot be accounted for by post-entry assets, and the pre-entry assets in the pool were acquired at different times, identification rules are necessary to establish which individual assets leave the pool on any disposal. If a disposal gives rise to a gain, the identification rules establish which pre-entry assets are left in the pool for identification with any subsequent disposal. If the disposal gives rise to a loss, the identification rules establish the dates and amounts of individual tranches of expenditure taken into account for time-apportionment purposes.
  • There may also be cases where the expenditure on individual assets in the pool has the same `relevant pre-entry date’, see CG47647, but the assets came into the group at different times. This may happen where the 1 April 1982 cut-off date applies to assets brought into a group at different times by different companies, and there is a subsequent no gain/no loss disposal which adds one company’s assets to another company’s asset pool. In order to apply the time-apportionment formula, identification rules are necessary to establish the date the particular assets accounted for by the disposal came into the group concerned.

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.