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HMRC internal manual

Capital Gains Manual

Schedule 7AA TCGA 1992: restrictions on capital losses: pre-entry loss

Allowable losses computed on the normal basis in respect of post-entry disposals in the gain period from the pooled asset are then set against the notional net pre-entry loss in the order in which they accrued until the notional net pre-entry loss is exhausted. To the extent that an allowable loss can be set against the notional net pre-entry loss in this way, it is treated as a loss on an asset held at the time the company joined the group. This means it is a qualifying loss for Schedule 7AA purposes and can be set against any pre-entry gains in the accounting period.

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.