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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: qualifying losses

TCGA92/SCH7AA/PARA4

In straightforward cases where a company joins only one group during an accounting period, the qualifying losses will be, subject to the restrictions in CG48204

  • losses brought forward from previous accounting periods (TCGA92/S8(1)(b)), and
  • losses of the gain period provided

    • the loss accrued before the relevant company joined the group, or
    • the loss accrued after that time on an asset which was in relevant ownership immediately before the company joined the group.

An asset is in `relevant ownership’ if it was owned by the relevant company immediately before it joined the group, or if it was owned by any other company which joined the group at the same time as the relevant company and which was in the same group as the relevant company immediately before that time.

  • MORE THAN ONE GROUP

In more complicated cases where a company joins more than one group during an accounting period, it will be necessary to consider each pre-entry gain individually. Qualifying losses in respect of a particular pre-entry gain will be, subject to the restrictions in CG48204

  • losses brought forward from previous accounting periods (Section 8(1)(b) TCGA 1992), or which accrued at the same time as, or before, the gain, and
  • losses of the gain period which accrue after the gain provided

    • the loss accrued before the relevant company joined the particular group, or
    • the loss accrued after that time on an asset which was in relevant ownership immediately before the company joined the particular group (see above for explanation of `relevant ownership’ and see CG48212 for pooled assets).

A company may have joined a UK CG group before 21 March 2000, when the rule that group membership was limited to UK-resident companies was in force. From 21 March 2000 the company may, for the purposes of TCGA92/SCH7AA¸ be treated as a member of a worldwide group as a result of the removal of the residence condition for group membership by FA2000/SCH29/PARA1. This does not mean that the company is a member of different groups before and after 21 March 2000. FA2000/SCH29/PARA46 (2) provides that the UK group before 21 March 2000 and the worldwide group after that date are treated as the same group (see CG48202).

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.