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HMRC internal manual

Capital Gains Manual

Gains from which pre-entry losses are deductible: losses pre-entry

TCGA92/SCH7A/PARA7 (1) (a)

If a company joining a group has a loss realised pre-entry, the loss can be deducted from any gain which the company realised before entry into the group.


The loss vehicle LV has a calendar year accounting period.

On 1 January 1994, LV disposes of an asset and realises a loss £2M.

On 1 July 1994, LV disposes of an asset and realises a gain £3M.

On 1 October 1994, LV leaves the L group and joins the M group.

In the computation for the accounting period 31 December 1994, the realised pre-entry loss £2M can be deducted from the realised pre-entry gain £3M.

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.