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

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.

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