Background Note
16.A person who makes a loss in a trade, profession or vocation may claim for the loss to be offset against their other income and capital gains. This is commonly known as “sideways loss relief”.
17.Despite previous legislative action to deter those who seek to misuse the sideways loss relief rules, the Government has continued to see evidence of avoidance activity that relies on the creation of contrived losses for use as sideways loss relief. This puts at risk substantial sums of tax.
18.The Financial Secretary to the Treasury (Stephen Timms) announced in a written statement on 21 October 2009 that legislation would be introduced with effect from that date to prevent sideways loss relief being given where the loss arises from arrangements and a main purpose of the arrangements is to obtain a tax reduction by means of sideways loss relief.