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Finance Act 2012

Background Note

8.From 1 April 2000 to 20 July 2009 it was possible for two companies (“A” and “B”) which were members of a group to make a joint election whose effect was that a disposal by one member of the group A to a person outside the group (“C”) would be treated as a disposal by A to B under the no gain/no loss rules in section 171(1) TCGA 1992 and then from B to C.

9.The legislation was changed significantly in Finance Act 2009 (FA 2009) and the effect of an election was altered.

10.Since the changes made by FA 2009 and now included within section 171A TCGA 1992, the effect of an election has been that an amount of a chargeable gain or allowable loss is treated as accruing in another group company. As a result under an election under section 171A the transferee company cannot be deemed to carry on a ring fence trade, and so the supplementary charge does not necessarily apply.

11.This section amends section 171A TCGA 1992 to ensure that an election cannot be made to transfer a ring fence chargeable gain from a company carrying on a ring fence trade to a company not carrying on a ring fence trade and so not subject to the supplementary charge.

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