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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: special cases

TCGA92/SCH7A/PARA9 (2) (d)

Paragraph 9(2)(d) covers any group satisfying the following condition. This is that the group’s principal company is, or has been, or has been under the control of, the company making the disposal, or another company which is or has been a member of a group within paragraph 9(2)(a), (b) or (c). The definition of `control’ is that in ICTA88/S416, which TCGA92/S288 (1) applies for capital gains purposes generally.


Within the R group there is a company RG holding an asset with an unrealised gain. RG leaves the R group and becomes a member of a separate capital gains group with principal company S, which the R group controls. Company LV, with a realised loss, leaves the L group and joins the S group. S then disposes of LV and RG to the R group, so that LV and RG are associated companies together joining the R group within the terms of paragraph 7(3) Schedule 7A. RG transfers the gain asset at no gain/no loss to LV, which disposes of the asset and crystallises the gain.

Paragraph 9(2) applies to the R group by virtue of paragraph 9(2)(a). This is because the R group is the most recent group into which LV has brought its realised loss. Paragraph 9(2) also applies to the S group by virtue of paragraph 9(2)(d). This is because the principal company of the S group has been controlled by a member of the R group.

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.