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In DMWSHNZ v HMRC (FTC/30/2013 – 3 March 2014) the taxpayer failed in its appeal against HMRC’s decision to reject a joint election made under TCGA 1992 s 171A. Section 171A allows notional transfer of assets within a group to enable capital losses to be set off against capital gains in circumstances where the losses and gains arise in different companies.

The appellant had been issued loan notes as consideration for the disposal of a company. As part of a restructuring the appellant and a company which had realised a capital loss were brought within the same group. The loan notes were then repaid and the appellant (treating the repayment of the loan notes as a disposal) entered into a joint election under s 171A with the loss making company.

S 171A applies when a group company ‘disposes of an asset to a person who is not a...

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