Commentary

D2.443 General calculation—Calculation of pre-entry loss

Corporate tax
Corporate tax | Commentary

D2.443 General calculation—Calculation of pre-entry loss

Corporate tax | Commentary

D2.443 General calculation—Calculation of pre-entry loss

The rules in this article were repealed in relation to the set off of pre-entry losses on or after 19 July 2011, subject to transitional rules (see D2.414).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

There are three specific rules relating to the initial calculation of the pre-entry proportion of a loss arising on the disposal of a pooled asset depending upon whether the disposal is a:

  1.  

    •     part disposal referable partly to pre-entry assets

  2.  

    •     part disposal referable entirely to pre-entry assets, or

  3.  

    •     disposal of the whole asset

In addition specific rules detail how the consideration and associated incidental costs are to be apportioned on such disposals (see below).

Part disposal of a pooled asset referable partly to pre-entry assets

Where the proportion of the asset disposed of exceeds the proportion of the asset which is referable to pre-entry assets, the excess proportion is treated as if it were a separate asset1. Except where the rules in D2.446 apply, the pre-entry proportion of the loss is calculated as the lower

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