Taxation of Chargeable Gains Act 1992 Schedule 7AA paragraph 4

Meaning of "qualifying losses"

Paragraph 4 of Schedule 7AA defines what counts as "qualifying losses" for the purposes of the degrouping charge rules, determining which losses may be set against gains arising when a company leaves a group.

• Qualifying losses are capital losses that arise to a company in the same group as the company subject to a degrouping charge, and that can be set against the degrouping gain.
• The losses must genuinely arise within the group context and be available for use in the period in which the degrouping charge crystallises.
• The definition was amended by Finance Act 2006 to refine the scope of losses eligible for offset against degrouping gains, with effect governed by transitional provisions in section 70(10)–(11) of that Act.
• Only losses meeting this specific definition can reduce a degrouping gain; other losses held by the company or group may not be applicable for this purpose.