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HMRC internal manual

Capital Gains Manual

Restrictions: capital losses: gains from which pre-entry losses deductible

Pre-entry losses are ring-fenced, and can only be set off against certain gains. Realised pre-entry losses can be set off against

  • gains which are realised pre-entry, or
  • gains realised post-entry in respect of assets brought into the group at the same time as the loss, or
  • gains on assets acquired from outside the group, and used for the purposes of a pre-entry trade carried on by the company which brought the realised loss into the group.

There are extensions to these rules dealing with cases where two or more companies leave one group to join another group at the same time. See CG47771+.

Note: Additional rules relating to loss buying were enacted in FA 2006. See CG47020+ for guidance on the rules which apply in priority to TCGA92/SCH7A for accounting periods ending on or after 5 December 2005.

FA11/S46 and FA11/SCH11 greatly simplified the rules in TCGA92/SCH7A for the deduction of losses on or after 19 July 2011. See CG47400+ for guidance on loss streaming from that date.