Corporation Tax

‘Pre-entry’ capital losses

Produced by Tolley
  • 16 May 2022 13:23

The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • ‘Pre-entry’ capital losses
  • Restrictions on use of pre-entry capital losses on company joining a group
  • Non-resident companies
  • Targeted anti-avoidance rules relating to capital losses

‘Pre-entry’ capital losses

This guidance note summaries anti-avoidance rules that prevent a company from buying another company in order to use its capital losses. The rules, which were amended by Finance Act 2011, are summarised below.

Restrictions on use of pre-entry capital losses on company joining a group

Pre-entry losses (defined further below) can only be set against gains on assets:

  1. held at the time the company joined the group

  2. bought after joining the group from a non-group company, which are used in a trade or business carried on by the company at the time it joined that group

  3. disposed of

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