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HMRC internal manual

Capital Gains Manual

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


The general rule in paragraph 5 Schedule 7A, see CG47720+, is that companies can elect to compute the pre-entry proportion of an allowable loss by reference to the asset’s market value at the relevant time (see CG47567). But this rule in paragraph 5 Schedule 7A for a market value election is set aside by paragraph 4(5) Schedule 7A in cases within the special rules for pooled assets in paragraph 4(2) and (3) Schedule 7A. Instead, there is a separate election right in paragraph 4(6) Schedule 7A which can take account of the market value of the pooled assets at the relevant time.

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.