Section 776 | Meaning of “tax-neutral” transfer

(1)This section sets out the consequences of a transfer of an asset being “tax-neutral” for the purposes of this Part.

(2)The transfer is treated for those purposes as not involving—

(a)any realisation of the asset by the transferor, or

(b)any acquisition of the asset by the transferee.

(3)The transferee is treated for those purposes—

(a)as having held the asset at all times when it was held by the transferor, and

(b)as having done all such things in relation to the asset as were done by the transferor.

(4)In particular—

(a)the original cost of the asset in the hands of the transferor is treated as the original cost in the hands of the transferee, and

(b)all such credits and debits in relation to the asset as have been brought into account for tax purposes by the transferor under this Part are treated as if they had been brought into account by the transferee.

(5)The references in subsection (4)(a) to the cost of the asset are to the cost recognised for tax purposes.