Beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Capital Gains Manual

Restrictions: capital losses: groups to which restrictions apply

In relation to realised losses, the loss set-off restrictions apply to the latest group into which a company brings the realised loss. In relation to unrealised losses, if a company brings an asset into a group, and the asset is disposed of at a loss by a company within the group, the restrictions apply to that group. There are rules which may extend the application of this rule to earlier groups. These rules cover accounting periods straddling changes of group membership, and cases where there is common control of separate capital gains groups. See CG47910+.

In the case of Prizedome Ltd and Limitgood Ltd v HMRC [2009 EWCA Civ 177] it was argued that, although the restrictions applied when a company (the company) joined a group (the first group), they did not continue to apply in respect of the company when the first group was subsequently acquired by a second group. The Court of Appeal confirmed that the restrictions did continue to apply.

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.