Share this content
0
188

Can losses bfwd be offset against holdco

Holdco only just incorporated

Didn't find your answer?

Search AccountingWEB

A client has a Jan 19 year end whereby it is expected to make a tax loss of circa £300k (there are no other losses b/fwd)

A holding company is going to be set up shortly via share for share exchange etc. In the Jan 20 year, holdo will charge man charges to wholly owned sub and shareholders will be paid dividends from holdco.

I understand that post April 17 losses can now be transferred to group companies. But does it matter that the company was a single company in the ye Jan 19, if not I assume it can transfer the losses cfwd to ye Jan 20 to the new hold co?

The holdo will charge management charges of around £50k (with very little overheads) and subsidiary will hopefully make around £100k taxable profit in ye 2020 (after deducting man charges). If holdco cannot utilise losses this structure will not (in the short term) work well as it will not be making full use of losses bfwd and it will create a tax charge earlier than expected in the holdco in its first year.

Replies

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.

Share this content