The loss-limiting formula ‘proceeds less post-valuation date expenditure’ will always result in a no gain or loss situation.

In order to understand this formula it is necessary to begin with the core base cost formula:
Base cost = valuation date value (VDV) + post-valuation date expenditure

A no gain or loss situation arises when:
Base cost = Proceeds.

This can be restated as:
VDV + post-valuation date expenditure = Proceeds

And then rearranged as:
VDV = Proceeds – post-valuation date expenditure

Proceeds
Calculating a capital gain or loss

Essentially the ‘proceeds less post-valuation date expenditure’ formula works backwards to arrive at a VDV that will yield neither a gain nor a loss after the post-1 October 2001 expenditure is added to it.