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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Targeted anti-loss buying rule - interaction with targeted anti-loss creation rule

There may be some situations where a company has had a qualifying change of ownership within the meaning given by TCGA92/S184C (see CG47023), where there was an intention of securing a tax advantage from the crystallisation of capital losses before the FA 2006 legislation came into force but where there was no intention to buy and sell capital losses or gains that arose in different ownership. These are not therefore cases that TCGA92/S184A or TCGA92/S184B are intended to affect.

A transitional provision in FA06/S70(9) to (11) ensures that TCGA92/S184A to F do not restrict the use of losses realised prior to 5 December 2005 where a qualifying change of ownership before that date involves a company ceasing to be a member of a group. However, the principal member of that group must retain control of the company at all times, and may not join another group (except where a new holding company is inserted above it).

There is an example of the operation of this provision at CG47052.

The legislative conditions under which the transitional provision operates were slightly changed with effect from Finance Act 2007.

All cases in which it is contended that Sections 70(9) to (11) apply, [and (12) from 21 March 2007], should be submitted to Capital Gains Technical Group.