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HMRC internal manual

Corporate Finance Manual

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HM Revenue & Customs
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Other tax rules on corporate finance: securitisation: periods beginning on or after 1 January 2007: the regulations: modifications to other tax rules: capital assets

Intra-group transfers of capital assets

Under the definitions in Regulations 4 to 9, a securitisation company can only hold ‘financial assets’, or be a company related to one that holds financial assets (see CFM72350). Such assets will normally be taxable under the loan relationships rules rather than the rules applying to the chargeable gains of companies. A group that sought to use the ‘no loss, no gain’ capital gains rules on the transfer of assets to shelter gains on non-financial assets in a securitisation company would be likely to fall foul of the definition of a securitisation company, or the unallowable purposes test in Regulation 12.

The capital gains intra-group transfer rules also allow for a notional transfer of an asset in accordance with TCGA92/S171A, and the reallocation of a gain or loss within the same group under TCGA92/S179A. If these provisions were to operate, gains on certain group assets might fall out of charge.

Regulation 18 therefore prevents TCGA92/S171 applying where the company to which an asset is transferred under the capital gains intra-group transfer rules is a securitisation company. This has the effect of ensuring that there can be no notional transfer of an asset to a securitisation company, since section 171A can only apply where section 171 applies.

Regulation 19 similarly disapplies TCGA92/S179A, where a gain is treated as accruing on another company in the group, where that other company is a securitisation company.