CT group losses

is there a pre-defined order of usage?

Didn't find your answer?

A Ltd is a 50% shareholder of B Ltd. A has losses carried forward that cover this year's taxable profit. B has both big losses brought forward and CY losses. B is going to be disposed of / disolved next year. I know that losses c/fwd can only be used by the group company that made those losses, but can B group relieve some losses to cover A's CY tax, so A still has it's losses c/fwd?

I suspect that I've not explained it very well ...

A: taxable losses b/fwd £50k

A: taxable profit CY £40k

B: taxable losses b/fwd £100k

B: taxable losses CY £40k

Can A c/fwd £90k, or can it only c/fwd £10k? Or something else?

 

Thanks

Replies (5)

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By Matrix
04th Dec 2018 22:00

A and B are not in a tax group so group relief is not in point.

Consortium relief may be in point (depending on the ownership) but B’s CY losses would only be available if A’s losses were brought forward post 1 April 2017.

There are complicated calculations but A would have to disapply the automatic offset of its b/f losses against the first trading profits and you would need to apportion the profits/losses to the overlapping accounting periods and only use the % of B’s losses owned by A, so max could only ever be £20k. Also this would not apply if B has ceased trading or had negligible activity when the losses arose. All hypothetical if they are pre 1 April 2017.

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Replying to Matrix:
ALISK
By atleastisoundknowledgable...
05th Dec 2018 16:22

Do I need to do anything special on the CT600 to say that I’m disapplying the automatic offset of b/fwd losses?

Thanks - I’ll fill in the missing gaps:

I meant to say consortium relief (there’s 2 x 50% shareholders).
A : YE Feb 18
B : YE Mar 18 (so CY losses all post 1/4/17)
I didn’t proof-read my question, I had meant to be giving 50% of B’s figures ie those relevant to A

Thanks

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Replying to atleastisoundknowledgable...:
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By Matrix
05th Dec 2018 19:31

If A's losses b/f are from the year ended Feb 2017 then this is prior to April 2017 so the old rules would apply so the b/f losses are automatically offset against the first available profits.

Thanks (1)
Replying to Matrix:
ALISK
By atleastisoundknowledgable...
05th Dec 2018 19:47

Oh right, I misunderstood you. Drats.

Thanks Matrix, much appreciated.

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ALISK
By atleastisoundknowledgable...
12th Dec 2018 11:00

Further to this ...
A: YE Feb 18. b/fwd losses (£50k), CY profit £40k.
B: YE Mar 18. b/fwd losses (£100k), CY losses (£40k)
A is 1 of 2 50% shareholders in B, consortium relief applied.

A must use its own b/fwd losses & c/f (£10k).
B is going to be dissolved soon. Can it relief it's CY losses now to A, declaring them as applying to APE Feb 19?

Could the following formula then work for A Feb 19?(assuming the same figures):
CY (19) profit £50k
b/fwd (18) loss (£10k)
b/fwd (18) consortium (£20k)
CY (19) consortium (£20k)
tax £nil

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