Taxation of Chargeable Gains Act 1992 section 177A

Restriction on set-off of pre-entry losses

Section 177A introduces Schedule 7A of the Taxation of Chargeable Gains Act 1992, which restricts the use of capital losses that a company had already built up before it joined a group of companies.

• A "pre-entry loss" is a capital loss that accrued to a company before it became a member of a group of companies.
• Schedule 7A restricts the ability to set off these pre-entry losses against chargeable gains made by other companies within the group.
• The rules are designed to prevent groups from acquiring companies primarily to exploit their accumulated losses for tax advantages.
• Specific conditions and limitations apply to determine when and how pre-entry losses may legitimately be used within the group.