Under ITA 2007, s 152 it is possible to offset losses against a number of types of income, where those losses arise from transactions that, had they been profitable, could have given rise to taxable income.
The changes announced in the Autumn Statement, which come into force with effect from 3 December 2014, prevent claims for relief from being made if the losses are incurred:
- within offshore funds that do not meet the reporting requirements in the Offshore Funds (Tax) Regulations 2009;
- in connection with life insurance policies, annuity contracts or capital redemption policies to which ITTOIA 2005, Pt 4 c 9 applies; or
- from arrangements that the taxpayer is party to and which have been put in place in order to reduce the liability to tax.
These changes introduce a targeted anti-avoidance rule into the legislation and appear to be aimed at high net worth individuals who are using offshore funds and financial instruments to manufacture losses. As such, they are in line with the anti-avoidance measures that have been introduced since Finance Act 2011, which have aimed to combat complex tax avoidance arrangements.