Taxation of Chargeable Gains Act 1992 section 184H

Avoidance involving losses: schemes securing deductions

Section 184H targets avoidance arrangements where a company uses capital losses to offset a chargeable gain while also securing an income tax deduction from the same arrangements, thereby obtaining a double tax benefit.

• The section applies where a company realises a chargeable gain in connection with arrangements, has capital losses available, and the company (or a connected company) also becomes entitled to an income deduction arising from the same arrangements.
• A main purpose of the arrangements must be to secure a tax advantage that involves both the income deduction and the setting of capital losses against the chargeable gain — if so, HMRC may issue a notice preventing any losses from being deducted against that gain.
• Certain arm's length sale and leaseback transactions involving land are specifically excluded, provided the parties are unconnected and the transaction falls within the sale and leaseback rules in sections 835 or 836 of CTA 2010.
• The rules apply regardless of whether the tax advantage benefits the company that made the gain or any other company, and "arrangements" is defined very broadly to include any agreement, understanding, scheme, transaction or series of transactions, whether or not legally enforceable.