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HMRC internal manual

Capital Gains Manual

Gains on assets held on entry into a group: pooled or merged assets

The provisions dealing with these special cases are in paragraph 7(5) Schedule 7A. Where a gain accrues on the disposal of the whole or any part of

  • an asset treated as a single asset (that is, a pooled asset) but comprising assets only some of which were held at the relevant time (see CG47567), or
  • an asset treated as held at the relevant time by a provision which treats an asset not held at the relevant time as the same as an asset which was held at the relevant time

there is the following loss set-off restriction. A pre-entry loss can be deducted from the gain under paragraph 7(1)(b) or (2)(b) Schedule 7A only to the extent of the proportion of the gain attributable to assets held at the relevant time , or which represents the gain that would have accrued on the asset held 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.