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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Gains on assets held on entry into a group: qualifying corporate bonds


  • a chargeable gain accrues under TCGA92/S116 (10) on the disposal of a QCB,


  • the QCB was not held at the relevant time (see CG47567),


  • the whole or any part of the asset which is the old asset for Section 116 purposes was held at the relevant time

the holding of QCBs is treated as a pre-entry asset to the extent that the original shares involved in the reorganisation were pre-entry assets. Paragraph 7(6) prescribes no apportionment method. You can accept any reasonable method of apportionment consistent with the result that pre-entry losses are only set off against gains relating to assets involved in the reorganisation which were 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.