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Targeted anti-avoidance legislation for capital gains tax

Legislation previously to be aimed at companies creating and using artificial capital losses to avoid tax is to be extended to include individuals, trustees and personal representatives. The legislation will relate to capital losses arising on disposals on or after 6 December 2006.

The capital loss schemes being targeted are those which arise as part of arrangements which have a tax advantage as their main purpose or one of their main purposes.

Our view
The announcement is an extension of the legislation to include all taxpayers who were creating capital losses, often without economic loss, to avoid UK tax. It is a further example of the Government’s aim of clamping down on perceived tax avoidance.