Taxation of Chargeable Gains Act 1992 section 279C

Effect of election under section 279A

Section 279C sets out how an election under section 279A works in practice, determining how a loss arising from the disposal of a right to deferred unascertainable consideration is carried back and set against chargeable gains of earlier tax years.

• When a valid election is made, the loss is treated as arising in the earliest eligible year rather than in the year the loss actually occurred, and is set against that year's chargeable gains up to a capped amount (the "first year limit").
• Any part of the loss not absorbed in the first eligible year can only be carried forward to later eligible years before the year of the loss — it cannot be set against gains in intervening years that are not eligible years.
• In each later eligible year, the amount of loss that can be deducted is capped at the amount on which the taxpayer would otherwise have been chargeable to capital gains tax for that year, ignoring the current election loss and any losses subject to future elections not yet made.
• HMRC must make all necessary adjustments — including repayments of tax and revised assessments — to give effect to the election once it has been validly made.