I am grateful to the hon. Lady for welcoming the Government amendments, but, as I indicated, I have a number of difficulties with the amendment that she proposes.

First, the amendment is technically defective as it would insert a repetition of the phrase

“unless the gains accrue to the company on a disposal of a pre-change asset” in section 184A(2) of the 1992 Act. Secondly, and perhaps more substantially, it would remove a relief  that is of value for some companies. A change made by subsection (5) removes references to section 184B of the 1992 Act from section 70 of the Finance Act 2006. Section 184B is about gain buying and the references in section 70 provide relief to some companies that allows them to use capital losses against certain gains.

The references are being removed because they are needed only on a transitional basis, unlike the equivalent rule for losses—unused losses can be carried forward to later years, but gains are taxed in the year that they arrive. An undesirable effect of the amendment would be to remove the ability to set off losses against gains for a few affected companies and to remove that relief retrospectively.

Thirdly, and perhaps most significantly, the amendment could create an opportunity for tax avoidance of the type that the Government amendments are aimed at preventing. The Government amendments apply from 9 May this year. If the Opposition amendment was not technically defective, it would mean that the tax treatment of transactions in the 18 months from December 2005 onwards could be revisited. That would give a small number of companies an opportunity to try to obtain relief where they had bought losses from other groups. Given those three difficulties, I hope that I have persuaded the hon. Lady not to press the amendment to a vote.

I would like to comment on the point about the main purpose test, which the hon. Lady raised at the end of her remarks. Revenue and Customs has published extensive guidance that incorporates examples of arrangements that are likely to be caught by the legislation. In addition, the guidance, which was well received, has been extended and clarified as a result of discussion with business and professional advisers. Therefore, I hope that it is not going to cause difficulty.

The Government amendments extend protection to encompass a small number of groups holding capital losses that the targeted anti-avoidance rule might not otherwise affect, and ensure that we retain a high level of protection against some rather aggressive tax avoidance, whereby one group of companies seeks to reduce its tax liability by buying the capital losses of another. I commend those amendments to the Committee.