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HMRC internal manual

Company Taxation Manual

HM Revenue & Customs
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Investment trusts: transfer of assets: groups

TCGA92/S171(2) and TCGA92/S101A

Section 171 TCGA 1992 allows companies which are members of the same group to transfer assets to one another at a tax value that gives rise to neither a gain nor a loss. But section 171(2)(c) TCGA 1992 prevents that rule from applying where the transfer is to or by a company that is an approved investment trust. This is because gains made by an approved investment trust are not chargeable gains.

If the section 171 TCGA 1992 no gain/no loss transfer is made to a company that, at the time of the transfer, was not an approved investment trust, but:

  • the company later becomes an approved investment trust for an accounting period beginning not more than six years after that transfer (not having been an approved investment trust for any earlier accounting period which began after the disposal);
  • at the start of that accounting period it still owns, otherwise than as trading stock, the asset transferred (or property into which a gain on that asset has been rolled-over under sections 152 to 158 TCGA 1992); and
  • at the time when it becomes an approved investment trust, the company has not previously been treated as making a disposal and reacquisition of the asset under section 179(3) TCGA 1992 (see CG45400+),

then section 101A TCGA 1992 applies.

Section 101A TCGA 1992 deems the company to which the transfer was made to have sold and reacquired the asset at its market value immediately after the transfer. The resulting chargeable gain or allowable loss is then deemed to accrue at the end of the last accounting period before the one in which the company becomes an approved investment trust.

An assessment for this purpose may be made at any time up to six years after the end of the accounting period in which the company became an approved investment trust. Any recomputations of liability in respect of other disposals, or adjustments of tax, that may be necessary as a result of the application of section 101A TCGA 1992 must also be made.

Value of one asset derived from another asset (freehold/leasehold reversion)


For the purposes of section 101A TCGA 1992 an asset acquired by a company at no gain/noloss under section 171 TCGA 1992 is treated as the same as an asset owned at a later date if the value of the second asset is derived from the first asset. In practice, this is most likely to involve the acquisition of the freehold reversionary interest in land by acompany which previously held a leasehold interest.