Taxation of Chargeable Gains Act 1992

[F1 Restrictions on the deduction of pre-entry losses U.K.

Textual Amendments

F1 Sch. 7A inserted (27.7.1993 with effect as mentioned in s. 88(3) of the amending Act) by 1993 c. 34, c. 88(2), Sch. 8

6 (1) In the calculation of the amount to be included in respect of chargeable gains in any company’s total profits for any accounting period— U.K.

(a) if in that period there is any chargeable gain from which the whole or any part of any pre-entry loss accruing in that period is deductible in accordance with paragraph 7 below, the loss or, as the case may be, that part of it shall be deducted from that gain;

(b) if, after all such deductions as may be made under paragraph (a) above have been made, there is in that period any chargeable gain from which the whole or any part of any pre-entry loss carried forward from a previous accounting period is deductible in accordance with paragraph 7 below, the loss or, as the case may be, that part of it shall be deducted from that gain [F2 (subject to sub-paragraphs (1A) to (1C)];

(c) the total chargeable gains (if any) remaining after the making of all such deductions as may be made under paragraph (a) or (b) above shall be subject to deductions in accordance with [F3 section 2A(1)] [F4 (subject to sub-paragraphs (1A) to (1C))] in respect of any allowable losses that are not pre-entry losses; and

(d) any pre-entry loss which has not been the subject of a deduction under paragraph (a) or (b) above (as well as any other losses falling to be carried forward under [F5 section 2A(1)]) shall be carried forward to the following accounting period of that company.

[F6 (1A) Sub-paragraph (1B) applies, in respect of an accounting period, if the amount of chargeable gains accruing to the company in the period exceeds the total of—

(a) the amount of pre-entry losses accruing to the company in the period that are deductible under sub-paragraph (1)(a), and

(b) the amount of allowable losses, other than pre-entry losses, accruing to the company in the period.

(1B) Where this sub-paragraph applies in respect of an accounting period—

(a) the sum of any deductions under sub-paragraph (1)(b) may not exceed the total of—

(i) the amount of pre-entry losses that, on the assumption in sub-paragraph (1C), would be deductible under sub-paragraph (1)(b), and

(ii) the amount of allowable losses (other than pre-entry losses) that, on the assumption in sub-paragraph (1C), would be deductible under section 2A(1), and

(b) for the purposes of sub-paragraph (1)(c), the deductions made under section 2A(1) may not exceed the difference between—

(i) the total of the amounts mentioned in paragraph (a)(i) and (ii), and

(ii) the amount of pre-entry losses deducted under sub-paragraph (1)(b).

(1C) The assumption is that deductions under sub-paragraph (1)(b) are treated for the purposes of Part 7ZA of CTA 2010 (restrictions on obtaining certain deductions) as if they were made under section 2A(1)(b) of this Act.]

(2) Subject to sub-paragraph (1) above, any question as to which or what part of any pre-entry loss has been deducted from any particular chargeable gain shall be decided—

F7 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) F8 ... , in accordance with such elections as may be made by the company to which the loss accrued;

and any question as to which or what part of any pre-entry loss has been carried forward from one accounting period to another shall be decided accordingly.

(3) An election by any company under this paragraph shall be made by notice to the inspector given—

F9 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) F10 ... , before the end of the period of two years beginning with the end of the accounting period of that company in which the gain in question accrued.

(4) For the purposes of this Schedule where any matter falls to be determined under this paragraph by reference to an election but no election is made, it shall be assumed, so far as consistent with any elections that have been made—

(a) that losses are set against gains in the order in which the losses accrued; and

(b) that the gains against which they are set are also determined according to the order in which they accrued with losses being set against earlier gains before they are set against later ones.]

Textual Amendments

F2 Words in Sch. 7A para. 6(1)(b) inserted (with effect in relation to accounting periods beginning on or after 1.4.2020 of the amending Act) by Finance Act 2020 (c. 14), Sch. 4 paras. 18(2), 42 (with Sch. 4 paras. 43-46)

F3 Words in Sch. 7A para. 6(1)(c) substituted (with effect in accordance with Sch. 1 paras. 120, 123 of the amending Act) by Finance Act 2019 (c. 1), Sch. 1 para. 91

F4 Words in Sch. 7A para. 6(1)(c) inserted (with effect in relation to accounting periods beginning on or after 1.4.2020 of the amending Act) by Finance Act 2020 (c. 14), Sch. 4 paras. 18(3), 42 (with Sch. 4 paras. 43-46)

F5 Words in Sch. 7A para. 6(1)(d) substituted (with effect in accordance with Sch. 1 paras. 120, 123 of the amending Act) by Finance Act 2019 (c. 1), Sch. 1 para. 91

F6 Sch. 7A para. 6(1A)-(1C) inserted (with effect in accordance with Sch. 4 para. 42 of the amending Act) by Finance Act 2020 (c. 14), Sch. 4 para. 18(4) (with Sch. 4 paras. 43-46)

F7 Sch. 7A para. 6(2)(a) omitted (with effect in accordance with Sch. 11 paras. 11, 12 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 11 para. 5(2)(a)

F8 Words in Sch. 7A para. 6(2)(b) omitted (with effect in accordance with paras. 11, 12 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 11 para. 5(2)(b)

F9 Sch. 7A para. 6(3)(a) omitted (with effect in accordance with Sch. 11 paras. 11, 12 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 11 para. 5(3)(a)

F10 Words in Sch. 7A para. 6(3)(b) omitted (with effect in accordance with Sch. 11 paras. 11, 12 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 11 para. 5(3)(b)