There are restrictions on the use of allowable losses when companies move between groups. The rules were originally introduced in 1993 to counter ‘loss-buying’. At its most extreme that is where a profitable group acquires a company with no assets but has realised substantial capital losses. When the group realises capital gains these can be transferred to the company with losses under TCGA92/S171A.

Similarly, it would be possible for a group to sell a subsidiary that is to realise a gain to another group with surplus losses, known as ‘gain-buying’.

The development of legislation

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