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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4075
Experience:  FCCA FCMA CGMA ACIS
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I am a small business owner with 2 companies: one with

Customer Question

Hi
I am a small business owner with 2 companies: one with tax losses from prior years and the other with current year taxable profits - is there a way to net off the tax losses against the profits ?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Yes, but only if you incorporate the companies within a group. This can be done by arranging for one of the companies to be owned by the other. Within a company group losses may be utilized up, down or sideways as convenient, carried forward and sometimes back as convenient. Otherwise your solution is to invoice the company with profits from the company with losses which is probably the easiest solution. This is exactly what the big organisations like Starbucks do except they move their [profits offshore to tax havens.
Customer: replied 1 year ago.
Thanks Keith
If I use the group option, can the prior year tax losses of company 1 be set against the current year profits of company 2 ? Looking at the HMRC website, forming a group to utilise prior year tax losses isn't allowed ?
Or if I use the recharge option, what would be the basis of the recharge, as the staff are dedicated to each company ?
Expert:  bigduckontax replied 1 year ago.
You are correct so that option isn't open save in the current year. You would merely raise an invoice from the company with the losses against the other company for say consultancy services. That is exactly what the big boys like Starbucks and Vodafone do except they are invoiced off shore and thus avoiding Corporation Tax on huge chunks of profits. Please be so kind as to rate me before you leave the Just Answer site.