Commentary

D2.449 Special calculation—Election for alternative calculation

Corporate tax
Corporate tax | Commentary

D2.449 Special calculation—Election for alternative calculation

Corporate tax | Commentary

D2.449 Special calculation—Election for alternative calculation

The rules in this article were repealed in relation to the set off of pre-entry losses on or after 19 July 2011, subject to transitional rules (see D2.414).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

Where the special calculation applies for the purpose of determining the pre-entry proportion of a loss, it is not possible to make an election to calculate the pre-entry proportion of that loss by reference to market value (see D2.445)1.

It is, however, possible to make an election for an alternative calculation of the pre-entry proportion, in place of the special calculation. (It is also possible to elect that this alternative calculation carried out by reference to market value2).

Effect of alternative calculation election

This election means that the pre-entry proportion of the loss on a disposal is calculated as if:

  1.  

    (a)     the rules applicable to the special calculation had been left out of account, and

  2.  

    (b)     the identification of the assets disposed of is reversed from that applicable to the general rules (D2.442), so that

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