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HMRC internal manual

Capital Gains Manual

Capital loss buying: pre-FA93: News International case

The basic facts in the case of News International plc v Shepherd 62TC495 are that News International plc held shares in several companies, which were likely to give rise to substantial gains on disposal. To avoid tax on these disposals, News International plc acquired a 100 per cent shareholding in a company Lyntress Ltd which had substantial realised losses. The shares pregnant with gain were then transferred intra-group by New International plc to Lyntress Ltd. Lyntress Ltd sold these shares on a stock exchange over a period of time, and claimed to set its losses against the gains which arose on the share sales.

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.