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spread-betting disaster

Hi all,

A client has a bit of a problem. He has lost all of his (100% owned) company's money on spread-betting, and is facing a grim few years skint, but still paying the CT on his profitable trading activity. 

I know that spread-betting is non-taxable (BIM22020 et al) although the cases on that all refer to individuals. Has anyone seen this claimed as a trading loss in a company CT return?

The ideal would be to get trading relief, but worst possible would be to treat it as dividends. If it can't be relievable as taxable losses, does it just get washed through as a non-taxable company loss? or am I missing something.

Thanks

 

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By occca
04th Dec 2012 18:12

.

Was the spreadbetting done in the name of the company or the individual?

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04th Dec 2012 19:15

Two possibilities

If the trading account was in the individual's name the money was his and he must have received it from the company as either salary, loan or dividend. The facts will determine which and the tax consequences of this will follow as normal. Probably a loan that he cannot now repay.

In the unlikely event that the trading account was in the company's name there will be no tax relief available for the loss. In the same way as there would be no tax due had the betting activity generated a profit. That's why gambling winnings are not taxable - most people lose money and to tax the net winnings would mean allowing gamblers to offset their losses. It makes no difference whether the gambler is an individual or a corporate.  The only time profits and losses from gambling are treated as taxable/allowable is when the 'gambler' has set things up as a clear business proposition. Not many people pursue this route as it would mean all their winnings would become taxable. 

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By carlgr
04th Dec 2012 22:19

thanks

That's rather what I thought. With some effort he may be able to demonstrate a nominee arrangement, and a business structure to facilitate professional spread-betting activity, but its not entirely convincing. Thanks anyway.

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For obvious reasons ....

whoever is taking his 'bets' would not have contracted knowingly with a limited company.

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05th Dec 2012 10:08

Your client was very rash I'm afraid - he should have traded CFDs if he wanted the possibility to offset losses not spread bets.

http://www.contracts-for-difference.com/Tax-claims.html

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