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HMRC internal manual

Capital Gains Manual

Targeted anti-loss buying rule - interaction with targeted anti-loss creation rule - example

Group A is made up of A plc, its 100% subsidiaries B Ltd and C Ltd and its 100% subsidiary X Ltd, a company limited by guarantee. In March 2002 (i.e. prior to 5 December 2005), A plc disposes of 76% of its interest in B Ltd to X Ltd. Because of earlier asset transfers to which TCGA92/S171 applied, the de-grouping provisions apply which crystallise a loss in B Ltd. An election is made under TCGA92/S179A for the loss to be deemed to accrue in C Ltd.

In the circumstances set out above the loss accruing to C Ltd may be used to frank subsequent gains on assets accruing to A Ltd or C Ltd.