Corporation tax – Groups and chargeable gains for Paper P6 (UK) – part 3: self-test

Test your understanding

(1). Which of the following would be a valid reason to transfer a chargeable gain from HO Ltd to LF Ltd?

A LF Ltd has purchased a qualifying business asset such that the gain on the asset sold can be rolled over.
B LF Ltd has capital losses brought forward.
C HO Ltd is paying corporation tax at a lower rate than LF Ltd.

(2). In what circumstances can a pre-entry capital loss be used?

. State whether the following statements are true or false.

A The use of pre-entry capital losses is not restricted if no change is made to the nature or conduct of the trade of the company with the pre-entry losses.
B It is not possible to transfer capital losses between group companies.