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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Schedule 7AA TCGA 1992: restrictions on capital losses: restriction on loss set off

TCGA92/SCH7AA/PARA2

The amount to be included in the relevant company’s total profits for the gain period is calculated by adding together separate amounts in respect of the pre-entry gains and of other gains in the accounting period. This effectively ring fences the pre-entry gains so that the restrictions on setting off losses can be applied to them. Separate calculations are therefore needed of

  • the `adjusted pre-entry gains’ (see CG48204), and
  • all other gains (if any) made in the accounting period. These gains are calculated under the normal CG rules after disregarding all pre-entry gains and any losses set against them in accordance with Schedule 7AA.

Any losses which are set off in adjusting the pre-entry gains are not available for carry forward to later accounting periods.

Note: New rules relating to gain buying were enacted in FA 2006. See CG47320+ for guidance on the rules which apply for accounting periods ending on or after 5 December 2005.