12 Loss schemes — companies

(1) This Regulation applies to a transaction where one of the parties to the transaction is a company that has, or expects to have, unrelieved losses at the end of an accounting period and an informed observer, having examined the transaction, could reasonably conclude that a main benefit of the transaction is—

(a) that the company transfers those losses to another party who would be expected to use them to reduce its corporation tax liability, or

(b) that the company is able to use those losses to reduce its corporation tax liability.

(2) For the purposes of paragraph (1) “unrelieved losses at the end of an accounting period” means trading losses in respect of which relief could not have been given (but for the transaction) under the Principal Act for that, or any previous, accounting period.