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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Schedule 7AA TCGA 1992: restrictions on capital losses: assets acquired at different times

TCGA92/SCH7AA/PARA6

Paragraph 6 Schedule 7AA TCGA 1992 applies to any allowable loss on a post-entry disposal in the gain period of the whole or part of an asset

  • treated as a single asset, but which comprises assets only some of which were held by the relevant company or an associated company immediately before it joined the group (provided the loss on the disposal does not fall within paragraph 5 Schedule 7AA), or
  • which, although not held by the relevant company or an associated company immediately before it joined the group, is treated as the same as an asset which was held at that time (for example, where a company which has a leasehold interest in a property at the time of joining a group subsequently acquires the freehold).

`Associated companies’ for these purposes are companies which joined the group at the same time as the relevant company, having also been in the same group as the relevant company immediately before that time.

Only a proportion of the allowable loss on a disposal of an asset within paragraph 6 Schedule 7AA is treated as a qualifying loss available to set against a pre-entry gain of the accounting period. This is the proportion of the loss which

  • on a just and reasonable apportionment is attributable to those assets actually held at the time the relevant company joined the group, and to the extent that it does not come within this bullet
  • would have accrued if the asset disposed of had been the asset actually held at the time the relevant company joined the group.

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.