Commentary

D8.372 Operation of deferral relief

Corporate tax
Corporate tax | Commentary

D8.372 Operation of deferral relief

Corporate tax | Commentary

D8.372 Operation of deferral relief

Postponement of the original gain

The deferral relief operates by setting off some or all of the amount of the gain that is invested in qualifying investments (see D8.371). The investing company must claim the postponement relief in order for the gain to be deferred. In the claim, the investing company must specify how much of the gain it wishes to be deferred, but that amount cannot exceed the qualifying expenditure on qualifying, replacement shares which has not already been claimed1. The investing company can only claim relief for the expenditure once. The relief claimed cannot exceed so much of the original gain as has not already been relieved2.

It is not necessary that the disposal proceeds of the gain which is to be deferred are themselves actually reinvested; separate moneys may be used to fund the qualifying investment. Furthermore, there are no requirements that an amount equal to the proceeds must be reinvested; it is the reinvestment of some or all of the gain which is important.

Once a claim is made, the amount of the gain specified in the claim is treated as not arising at the time of the disposal of the original

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