Clogged up?

My client is considering making a gift of enterprise investment scheme shares to his adult son.

Both enterprise investment scheme income tax relief and capital gains tax deferral relief have been claimed in respect of the shares.

They have been held for more than three years so the income tax relief will not be in jeopardy. My client is aware that the proposed gift is a chargeable event under TCGA 1992 Sch 5B which will cause the deferred gain to come into charge in the year in which the gift is made.

However my client has substantial ‘clogged’ losses available in respect of previous assets gifted to the same connected party. My query is whether the deferred gain coming into charge on the occasion of the gift of the enterprise investment scheme shares can utilise those clogged losses.

My initial reaction...