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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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New anti-loss buying rules in FA 2006 - general

Anti-avoidance provisions in FA 2006 (called Targeted Anti-Avoidance rules, or ‘TAARs’ for short) included additional measures to counter capital loss buying (known as TAAR2).

The legislation was announced in the Chancellor’s Pre Budget Report (“PBR”) on 5 December 2005 and is effective from that date, but see CG47040 for details of commencement.

A statement of principles, draft guidance document and draft legislation were published at PBR. The statement of principles, on which the legislation was based, and final version of the published guidance document can be found at appendix 8.

The intent of the targeted anti-avoidance rule enacted in TCGA92/S184A to F is to apply the second of the principles set out in the HMRC statement of 5 December 2005, that in general, a company’s capital losses should only be available against its own capital gains or those of companies that were under the same economic ownership when the loss arose and when the loss is utilised.

The loss buying legislation in TCGA92/S184A to F takes precedence over existing legislation in TCGA92/Sch 7A. But if TCGA92/S184A to F do not apply, TCGA92/SCH7A may still take effect. See CG47520+ for detailed guidance on TCGA92/SCH7A.

If you identify a case to which you think the loss buying TAAR may apply, you should seek advice from the CG specialist in your area of business.  Capital Gains Technical Group should be contacted before contending that the legislation applies.