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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Targeted rules to prevent income to capital converter schemes by companies - income deduction and matching capital gain cases

TCGA92/S184H deals with schemes involving deductions, where arrangements are put in place with the intention of using capital losses to reduce a chargeable gain. And, as a consequence of the transaction which produced the gain, the company, or a connected company, becomes entitled to a deduction in computing its income profits chargeable to corporation tax.

If the legislation is to apply it is necessary for there to be arrangements that tie in the realisation of a gain, the deduction obtained, and the use of losses to reduce the gain, to secure a tax advantage.