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HMRC internal manual

Capital Gains Manual

Groups to which loss set-off restrictions apply: special cases

TCGA92/SCH7A/PARA9 (2) (e)

If there is a group to which Schedule 7A applies as the result of paragraph 9(2)(a), (b) or (c), then paragraph 9(2)(e) covers any other group satisfying the following condition. This is that the group includes or has included either the principal company of the first group or a company which has had that principal company under its control. The definition of `control’ is that in ICTA88/S416, which TCGA92/S288 (1) applies for capital gains purposes generally.


Company LV holding asset A leaves the L group and joins a group with principal company R. The loss remains unrealised. Within the R group there is a company RG holding an asset B with an unrealised gain. The principal company of the R group artificially degroups LV and RG into a separate capital gains group which has S as its principal company. R controls S. Within the S group asset A is disposed of at a loss and asset B is disposed of at a gain.

Paragraph 9 Schedule 7A applies to the S group because of paragraph 9(2)(b). Paragraph 9 also applies to the R group by virtue of paragraph 9(2)(e). This is because a member of the R group has controlled S.

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.