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Can trade losses be offset

Transfer of shareholding

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Company A is owned by Mr X and traded as an electrical contractor. It has been dormant for three years and has trading losses of £50k carried forward. Mr X's son also has an electrical contracting company.    

The son is wondering if he could be transferred the shares in company A from his father to allow him to utilise the £50k trading losses as both companies are within the same trade? Is the main issue here around the length of time Company A has been dormant which would stop the losses being able to be offset?

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By Anonymous.
14th Jul 2020 19:46

SA2016 wrote:

Is the main issue here around the length of time Company A has been dormant which would stop the losses being able to be offset?

I'm not up to date but, unless the rules have changed, it's difficult to see how the losses didn't disappear when the trade ceased. When you say dormant, can you distinguish that from cessation?

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By Tim Vane
14th Jul 2020 19:54

Assuming that the company is really dormant and the trade hasn't ceased, then you will need to advise the son of the targeted anti avoidance provisions brought in with the recent loss reforms that put restrictions on purchased losses with the very intention of stopping what he is trying to do. If memory serves it's all covered in Schedule 4 FA (No2) 2017, so you'll need to have a read.

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By Paul Crowley
15th Jul 2020 08:59

Why does not Dad employ son?
Assuming no cessation advised to HMRC

But as other say,there are hurdles to negotiate. Clients should have thought of this three years ago

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RLI
By lionofludesch
14th Jul 2020 23:25

I vote no.

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By SA2016
15th Jul 2020 07:58

Thanks all, much appreciated.

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