Commentary

D2.417 Pre-entry asset—Definition

Corporate tax
Corporate tax | Commentary

D2.417 Pre-entry asset—Definition

Corporate tax | Commentary

D2.417 Pre-entry asset—Definition

The rules in this article were repealed in relation to the set off of pre-entry losses on or after 19 July 2011, subject to transitional rules (see D2.414). Prior to 19 July 2011, the rules in this article applied only where the loss buying rules (D2.402–D2.406) did not apply (ie where there was no arrangement for avoiding tax, eg on a merger or takeover).

In addition to losses realised before a company joins a relevant group (D2.411–D2.413), a pre-entry loss can be realised after a company joins a relevant group, if it arose on the disposal of an asset (a 'pre-entry asset') which it held before joining the relevant group.

The basic rule is that an asset is a pre-entry asset on the following 'relevant events'1:

  1.  

    •     the asset was held by a company at the time when it joined the worldwide group and the company was either resident in the UK or brought assets within the UK tax net, or

  2.  

    •     the asset was held by a non-resident company that was already within the worldwide group but the company became resident or transferred assets so that those assets came within the UK tax net

An asset is

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