I have one of those blank moments. Ltd Co client has accumulated property losses and a current year chargeable gain.Can the company set the earlier years losses
against current years chargeable event.
I know that I should know the answer so please be kind.
Thanks a lot.
Replies (14)
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Here you go ...
http://www.hmrc.gov.uk/manuals/pimmanual/PIM4200.htm
With kind regards
Clint Westwood
Talking about companies here so a dissenting view
s62 CTA2010 comes in to play for companies
s5 So far as the loss cannot be deducted, it -
(a) is carried forward to the next accounting period, and
(b) is treated for the purposes of this section as a loss made by the company in the UK property business in that period.
As it then becomes a 'current' period loss it is available for use against total profits which for a company includes chargeable gains.
All provided the property business continues in the period with the gain.
Surely that's missing the point. The OP was wanting to offset the loss against the current year's chargeable event. As pointed out this cannot be done, since the gain is a gain and the loss is not a capital loss.
The offset of property losses against total profits is separate and does not reduce the chargeable gain, only the total taxable profit. The fact that it has the same net result (assuming an overall profit for the year) does not mean you can offset the property loss against the chargeable event directly.
Property losses
From earlier comments I assume that the previous losses are revenue not capital. The rules are similar to personal income and gains. An income loss brought forward cannot be offset against a Capital Gain. Your CT software should not let you do that.
I'm with GaryMc
There is a lot of misinformed comment in this thread! The rules are not at all similar to personal income and gains, they are completely different. A company's property rental losses can, and indeed MUST, be deducted from the next available total profits in a following accounting period (Section 62 CTA2010, as GaryMc has posted above). This is automatic, and does not require a claim. For CT purposes, "total profits" includes chargeable gains (Section 4(3) CTA2010), so the fact the total profits arise from a gain rather than a profit is totally irrelevant.
Opinion is not divided.
There are just a few numpties who insist on contributing when they clearly do not have a clue what they are talking about.
The "chargeable event" you refer to gives rise to a chargeable gain which will form part of the company's total profits.
The company's brought forward property business losses are, if the property business is still being carried on, treated as a property business loss arising in the current period, which can be offset against the company's total profits (which will include the chargeable gain).
GaryMc has responed correctly, and Tim Vane has pointed out some semantics that are more to do with the imprecision of your OP than Gary's response. Apart from mjswebster's post and Clint's link, everything else is at best irrelevant and at worst just plain wrong.
property losses
This bad tempered steam shows the futility of trying to answer a specific question without any appreciation of the facts. That starts with th e totally imprecise description of a "property business" - developer, investor, agent, builder? Those are all property businesses!