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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Groups to which loss set-off restrictions apply: introduction

The loss set-off restrictions apply to any pre-entry loss which a company brings into a group, referred to in paragraph 1(1) Schedule 7A as `the relevant group’. If there is only one such group, the provisions of Schedule 7A apply in relation to that group. However, a company may

  • move into and out of different groups, carrying forward a realised capital loss;


  • bring into different groups at different times an asset which is later disposed of at a loss.

Where there is more than one group which would be a relevant group in relation to that company, it is necessary to establish the particular group or groups where the loss set-off restrictions apply. At the same time, it is necessary to guard against manipulation where separate capital gains groups are created under common control, and companies with realised losses or with loss assets are moved from one group to another.

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.