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Is it possible to have unrelated trades under one company? If yes, what are the tax implications where gains ans losses arise? I have S. 768 ICTA 1988 in mind.

Khushal K. Napal

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By Euan MacLennan
12th Feb 2007 13:57

Yes, it is possible
... for a company to have more than one trade.

If one makes a loss in a year, that loss may be set against the profits of other trades and capital gains in the same year under s.393A(1)(a) ICTA 1988 and if they are not enough, against all profits and gains in the previous year under s.393A(1)(b). Or the loss may be carried forward and set against profits of the same trade - but only of the same trade - in subsequent years under s.393(1).

s.768 only applies where there is both a change of ownership of the company and a major change in the nature of the trade (or a revival of the same trade by the new owners after the previous owners had allowed it to lapse); it acts by disallowing the carry forward of losses under s.393. A major change of nature is obviously less extreme than having two different trades.

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By 1381129
12th Feb 2007 20:16

Many thanks, Euan.
I have received a lot of queries about this strategy through a limited company and I thought it worthwhile confirming my views on this.

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