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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I need advice on setting off loss against other income within

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I need advice on setting off loss against other income within group of compnies.
Submitted: 1 year ago.
Category: Tax
Customer: replied 1 year ago.
We have client with holding company (A LTD) and 5 subsidiaries. He has sold one of the subsidiaries (B LTD)at loss of 500k to unconnected person and sold another subsidiary (C LTD) to another group company (D LTD) of which he is the owner so sold it to connected person for which he made gain of 250k. So in the main holding company (ALTD) he has net loss of 250k which is loss on sale of investment which I presume is capital loss. Now there are other subsidiaries within A LTD where he made trading profit. So my questions is 1. Can he set off 250k remaining loss against trading income of other group of companies 2. If yes, how do I show that in CT600 of A Ltd and subsidiary and if no than I believe capital loss will be carried forward until there is future capital gain.
Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your question..Companies are liable to corporation tax on their capital gains. The available relief for any capital losses is, however, quite limited. Capital gains and losses arising in an accounting period must be aggregated and if there is an overall loss then any unrelieved capital losses are carried forward and set against chargeable gains in future accounting periods.
Customer: replied 1 year ago.
can you explain that in bit more detail with my example.
Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your reply.. I can refer you to HMRC manual Ref CG40230 that explains the way capital losses are treated. The link is herehttp://www.hmrc.gov.uk/manuals/cgmanual/CG40230.htmand herehttps://www.gov.uk/guidance/corporation-tax-calculating-and-claiming-a-loss#capital-losseshttp://www.accaglobal.com/uk/en/technical-activities/technical-resources-search/2014/january/corporation-tax-losses.html I hope this is helpful and answers your question.
Customer: replied 1 year ago.
Thank you. I was hoping to get direct answer related to my example. I hope it doesn't make difference if it share sale or asset sale. Here holding company sold share in subsidiary at loss which I presume is capital loss for which above rule will be applicable.
Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your reply.Loss arising from sale of share (investment) is capital loss and the aforementioned treatment applies..Sale of assets where you have capital allowances would result in balancing charge/allowance and dealt with differently. I hope this is helpful.I will appreciate if you would kindly rate my service/accept the service I have provided before you leave the site, to ensure I get credited for it by Just Answer.
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4886
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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