C2.604 Election to disapply restrictions
The provisions below only apply to companies.
A company which is potentially affected by the restrictions in C2.603 can elect that gains and losses on disposals after 5 April 1988 of assets which he held on 31 March 1982 should automatically be calculated using the market value of each asset at 31 March 1982, irrespective of the gain or loss arising under the alternative calculation1. The effect of this election is that a loss so computed is an allowable loss even though there may be a smaller loss, or a gain, when computing on the historic cost. Conversely, the election may result in a larger chargeable gain arising.
An election also has the effect of substituting market value at 31 March 1982 in the case of:
(a) disposals which, either on the facts of the case or under TCGA 1992, Sch 2 (see C2.611), give rise to neither a gain nor a loss2; and
(b) specified no gain/no loss disposals3
The election is irrevocable4. Subject to certain exceptions (see below), it must apply to all other disposals made by the company after 5 April 1988 of assets which he held on 31 March 1982 in the same capacity. Where tax has already been paid on gains arising on such disposals under the alternative calculation, the liability is increased or repayment of tax is made, as appropriate5.
Where gains are assessed on a UK resident shareholder or participator in non-resident company6, the non-resident company should make the election7.
Special provisions apply