Commentary

D2.313 Group capital gains—Intra-group transfers of trading stock

Corporate tax
Corporate tax | Commentary

D2.313 Group capital gains—Intra-group transfers of trading stock

Corporate tax | Commentary

D2.313 Group capital gains—Intra-group transfers of trading stock

Special provisions apply when a capital asset is transferred intra-group that was either trading stock in the hands of the transferor or becomes trading stock in the hands of the transferee, as follows:

TransactionTreatment
Capital asset in hands of transferor but becomes a trading asset in hands of transfereeTransferor company will transfer the asset under the no gain/no loss provisions and the transferee company will immediately appropriate the asset to its trading stock (at market value) [See Note 1 below].
Trading asset in hands of transferor but becomes a capital asset in hands of transfereeTransferor company is deemed to appropriate the asset (at market value) to non-trade use and then have transferred it under the no gain/no loss provisions to the transferee company.
Note 1. Although in certain situations an election may be made for the appropriation to take place at a no gain/no loss price. (See D2.415 regarding the restriction of pre-entry capital losses where the election relates to an asset brought into a group of companies by a company joining the group).

Note the trade concerned must be within the scope of UK corporation tax (ie carried on by a UK resident company or in the UK by the permanent establishment of a non-UK resident company)1. If the trade is not within the scope of UK corporation tax,

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