Commentary

D2.421 Pre-entry proportion—General rule

Corporate tax
Corporate tax | Commentary

D2.421 Pre-entry proportion—General rule

Corporate tax | Commentary

D2.421 Pre-entry proportion—General rule

The rules in this article were repealed in relation to the set off of pre-entry losses on or after 19 July 2011, subject to transitional rules (see D2.414).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).

The calculation of the pre-entry proportion of an allowable loss can be made using the basic method, or alternatively an election can be made for the market value rule to apply (see below).

There are also a number of special rules that apply for the following three classes of assets:

  1.  

    •     shares or debentures received as a result of a reorganisation, or a transaction treated in the same way as a reorganisation1, where consideration is given for those shares or debentures (D2.422)

  2.  

    •     qualifying corporate bonds2, where those bonds were acquired in exchange for the original securities under a reorganisation, or a transaction treated in the same way as a reorganisation3 (D2.423)

  3.  

    •     assets held by a company at the time when it joined the group of companies concerned, where the assets are treated as having been acquired by that company for a consideration which secured that no gain or loss accrued on the corresponding disposal, for example, an intra-group disposal (D2.424)

The basic

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial