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Considering pre-entry losses

05 May 2009
Issue: 4204 / Categories: Tax cases , Capital Gains , Losses
CRC v Prizedome Ltd and another, Court of Appeal, 12 March 2009

The taxpayer companies realised capital losses. They later became subsidiaries of GL which itself was taken over by GH.

The subsidiaries in the GH group made capital gains. The new group elected to offset the taxpayer companies’ losses against the gains of the other companies.

HMRC did not allow the claim but the companies’ appeal to the Special Commissioners succeeded.

The High Court reversed that decision so the taxpayers appealed to the Court of Appeal.

The main issue was which group was the relevant one for the purposes of TCGA 1992 Sch 7A para 1(6).

The judges in the Court of Appeal said that the reference to ‘relevant group’ in para 1(6)(b) was confined to the losses of the acquired (the first) group which were not pre-entry losses in relation to that group immediately before its acquisition by the acquiring (the second) group.

It followed...

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