Corporation tax relief on investment loss

Corporation tax relief on investment loss

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I am in the process of preparing the year end accounts for a Ltd company, who have sufferred a loss from an investment, and would be grateful if someone could confirm (or point me in the right direction) that I have understood the tax relief available.

The company invested in a small company with 70% shares (£70 nominal value), then loaned the new company £82K for working capital.

Unfortunately the new company dissolved in less than 12 months, ( with lossess) . The £82k wil not be paid back.

I understand the loss should be treated as a capital gains loss and can only be relieved against other capital gains and not trading income.  As there are no capital gains in this year or any previous, the loss will be carried forward.

Is this correct? I seem to remember reading somewhere, that under certin circumstances the loss can be relieved in the current year against the trading loss, can anyone tell me  - if that is the case- what they circumstances are?

Thank you- any help / advise would be appreciated.

 

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By Ruddles
22nd Oct 2018 12:41

You may be thinking of CTA 2010 s68. Not enough info in your post, but I suspect that s68 would not apply in this case (EDIT - not least because, as noted below, it wouldn't be a capital loss)

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By Dib
22nd Oct 2018 12:36

If your company owned 70% of the share capital of the other company they are connected for loan relationships purposes. As such, the loss on the loan is not allowable for tax in the lender's accounts but, equally, the credit is not taxable in the 70% subsidiary.

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By dianarose
23rd Oct 2018 10:53

Thank you

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By dianarose
23rd Oct 2018 10:53

Thank you

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