»Ê¹ÚÌåÓýapp

Intra-group transfers and other no gain/no loss disposals

»Ê¹ÚÌåÓýapp EGLBAGL Regulations (SI 2002/1970) make special provision, in regulation 8, for no gain/no loss disposals. »Ê¹ÚÌåÓýapp most common such occurrence is a transfer between companies in the same capital gains group, to which TCGA92/S171 applies. »Ê¹ÚÌåÓýapp rule applies, however, to any of the provisions listed at TCGA92/S288(3A), although some of these are irrelevant to companies.

Under regulation 8, a no gain/no loss disposal of matched shares does not result in a ‘net gainâ€� or ‘net lossâ€� on liabilities or derivatives being brought back into account. Instead, amounts are brought back into account in the accounting period in which the ‘first relevant disposalâ€� of the asset occurs. »Ê¹ÚÌåÓýapp ‘first relevant disposalâ€� means the first disposal of the asset that is not a no gain/no loss disposal.

‘First relevant disposal� occurs on or after 6 April 2010

Where

• there is a disposal of matched shares to an external party on or after 6 April 2010, and
• the shares have previously been transferred between group companies at no gain/no loss, also on or after 6 April 2010,

the ‘net gainâ€� or ‘net lossâ€� that is brought into account, by adjusting the disposal consideration (CFM62290), will reflect exchange gains or losses on hedging instruments that have previously been disregarded by the transferor company, as well as amounts disregarded by the transferee. »Ê¹ÚÌåÓýapp effect of regulation 7(3) is that all of the group companies which have owned the asset are, in effect, treated as one company when computing the ‘net gainâ€� or ‘net lossâ€�.

»Ê¹ÚÌåÓýapp amendments to regulation 7(3) and regulation 8 made by SI 2010/809 apply retrospectively, so the tax treatment will be the same even where the no gain/no loss disposal (or disposals) have occurred before 6 April 2010, unless the company makes an election under regulation 14 of SI 2010/809 (see CFM62340).

‘First relevant disposal� occurs before 6 April 2010

Regulation 8 operated slightly differently before the EGLBAGL Regulations were amended by SI 2010/809, although the practical effect was the same.

»Ê¹ÚÌåÓýapp effect of a no gain/no loss transfer between group companies was to crystallise the ‘net gainâ€� or ‘net lossâ€� on hedging instruments, as a capital gain or allowable loss, at the time of the transfer. »Ê¹ÚÌåÓýapp gain or loss is not, however, brought into account until the first relevant disposal occurs, when it is aggregated with any gain or loss arising in the transferee company.

CFM62330 gives an example of how regulation 8 operates.