Taxation of Chargeable Gains Act 1992 section 16A

Restrictions on allowable losses

Section 16A prevents capital losses from being treated as allowable losses where they arise from arrangements whose main purpose, or one of whose main purposes, is to secure a tax advantage.

• A capital loss is not an allowable loss if it arises directly or indirectly from arrangements designed to obtain a tax advantage, covering capital gains tax, corporation tax or income tax.
• Arrangements are broadly defined and include any agreement, understanding, scheme, transaction or series of transactions, whether or not legally enforceable.
• A tax advantage includes relief from tax, repayment of tax, avoidance or reduction of a tax charge, or avoidance of a possible assessment to tax.
• The restriction applies regardless of whether there are chargeable gains available to offset the loss against, and regardless of whether the tax advantage benefits the person with the loss or someone else.