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Carry-forward losses against total profits

Carry-forward losses against total profits

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Hi all,

I'm having a hard time understanding what CTA10/45A (1)-(3) means, relating to carry-forward losses.

I understand that if the trade ceased in the loss-making period, then the loss wouldn't be able to be carried forward against total profits.

However, assuming in the 1st accounting period, there is a loss made of £10k. In the 2nd accounting period, another loss is made of £5k and in that 2nd accounting period, the trade ceased.

We'd be able to carry-forward the £10k loss against total profits in the 2nd accounting period. It's also clear that we wouldn't be able to carry forward the £5k loss to be set-off against total profits in the 3rd accounting period. 

However, assuming we didn't use the £10 carry-forward loss against total profits in the 2nd accounting period, now that the trade has ceased in 2nd accounting period, can we continue to carry-forward the £10k loss from the 1st accounting period against total profits, in the 3rd accounting period?

Thanks a lot

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By Duggimon
31st Mar 2020 08:54

My reading of 45A (1) (c) is that if the trade ceases at any point in the future, the loss ceases to be available for carry forward, even if it later restarts. This isn't a situation I've had to deal with for any of my clients though so it's not something I've looked into in great detail, I may be wrong.

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Psycho
By Wilson Philips
31st Mar 2020 10:41

You need to read section 45C. (The answer to your question is no, BTW)

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Replying to Wilson Philips:
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By ocooper
01st Apr 2020 10:37

Thanks Wilson - it's clear for me now.

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Replying to Wilson Philips:
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By ocooper
01st Apr 2020 10:37

Thanks Wilson - it's clear for me now.

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