Tax with Tallon: How to use carried forward trading losses against a 'gain'

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Paula Tallon, director of direct tax with Chiltern responds to accountants' queries.

Q: My client, a limited company which commenced trading about 2 years ago has been offered 400,000 for its goodwill. The company has trading losses brought forward of about 150,000. My understanding is that trading losses brought forward cannot be offset against capital gains. Is this true?

A: Generally trading losses brought forward cannot be offset against capital gains. The question is whether or not we have a capital gain. Since April 2002 goodwill is dealt with under the rules for intangibles, FA 2002 Sch 29. This means that any transactions relating to goodwill acquired on or after 1 April 2002 fall into these new...

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