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HMRC internal manual

Capital Gains Manual

Restrictions: pre-entry loss: anti-flooding rule for pooled assets

Where there has been a reorganisation of share capital, it is necessary to take account of the rule in TCGA92/S127 which treats the new holding as the same asset as the original shares. In operating the FIFO rule, paragraph 4(11) Schedule 7A applies the paragraph 3(10) Schedule 7A rule equating post-reorganisation assets with pre-reorganisation assets. And where a reorganisation follows a series of acquisitions and disposals, the FIFO rule identifies the individual assets involved in the reorganisation.

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.