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HMRC internal manual

Capital Gains Manual

Schedule 7AA TCGA 1992: restrictions on capital losses: more than one company joining group

Where a number of companies leave one group together to join another group, securities held by those companies at that time are pre-entry securities. Those securities retain this identity throughout the gain period. It is possible for a company’s pool of pre-entry securities to be increased by the intra-group transfer to it of other securities of the same class in the same company which are identified as pre-entry securities in this way. If in the example in CG48214 GV had owned a subsidiary, GZ, which had joined the L group at the same time as GV and at that time GZ had held 100 X plc shares, it could have transferred these to GV and increased GV’s pool of X plc pre-entry securities.

Note: New rules relating to gain buying were enacted in FA 2006. See CG47320+ for guidance on the rules which apply for accounting periods ending on or after 5 December 2005.