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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Restrictions: pre-entry loss: time-apportionment: additional consideration

Paragraph 2(4) Schedule 7A can have the effect of treating a loss attributable to the post-entry period as a pre-entry loss, for example where the pre-entry cost is low in relation to additional consideration given on a post-entry reorganisation. But in this type of case the company concerned can elect under paragraph 5 Schedule 7A to compute the pre-entry loss by reference to the asset’s market value at the time of entry into the group, see CG47720+.

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.