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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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.
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.