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HMRC internal manual

Corporate Intangibles Research and Development Manual

intangible assets within CTA09/PART8: FA02 rule exceptions: fungible assets: additions to existing holdings: anti-avoidance rule

CTA09/PART8/S891 (3) - (7)

Under this rule the acquisition of fungible assets that would otherwise satisfy the FA02 rule, as adapted for them (CIRD11770) will not do so if the acquisition can be identified with the disposal of assets of the same kind that failed the general conditions of the FA02 rule.

Acquired fungible assets of this kind are to be identified as far as possible with assets realised within thirty days before or thirty days after the acquisition.

In applying this test assets realised earlier are to be identified before assets realised later and assets acquired earlier before assets acquired later.



A company holds 100,000 units of a fungible asset on 1 April 2002 and buys another 20,000 on 15 April. It sells 40,000 units on 1 June 2002 and buys 50,000 units on 15 June 2002. The purchases are from unrelated parties. It sells 30,000 units on 30 June 2002.


Following the 15 April acquisition the company is regarded as holding two assets: 100,000 units of existing asset and 20,000 of new asset.

The 40,000 units sold on 1 June are regarded as diminishing the existing asset in priority so that immediately afterwards the company has 60,000 units of existing asset of and 20,000 of new asset.

The 50,000 units acquired on 15 June are regarded as swelling the existing asset to the extent of 40,000 units under our 30 day rule. As a result, immediately afterwards the company holds 100,000 units of existing asset and 30,000 of new asset.

The sale of 30,000 units on June 30 diminishes the existing asset that immediately afterwards stands at 70,000.