FHL losses stranded?

FHL losses stranded?

Didn't find your answer?

Am dealing with someone who has a profitable furnished lettings business plus a FHL business comprising a single property.  The FHL business also latterly has been profitable on an annual basis but has significant losses b/fwd which until now have been ringfenced in the FHL business since the sideways relief of FHL losses has been blocked.

The (former) FHL property no longer qualifies as FHL and we are minded not to make a period of grace election.  2 questions arise

1) As the relevant property is now part of the general FL business, does the FL business also inherit the history of b/fwd losses?

2) If not, and the property subsequently qualifies as FHL in a later year, can you resurrect any losses b/fwd?

I'm guessing that the losses disappear permanently into the ether, but would welcome opposing views if any.  What little commentary I find on the subject is not encouraging but neither is it expressed with confidence.

With kind regards

Clint Westwood

Replies (4)

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paddle steamer
22nd Sep 2016 15:06

Sorry, not clear in my head, why are there two FHL business entities, is one re a partnership and the other as an individual?

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Replying to DJKL:
By nogammonsinanundoubledgame
22nd Sep 2016 15:22

Hi thanks for responding. Sorry if it was not clear. There is only one entity, who operates only one FHL business, plus another FL (not FHL) business

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Replying to nogammonsinanundoubledgame:
paddle steamer
22nd Sep 2016 15:26

Thanks, no it was clear, I just cannot read properly.

I need to think about this/google/pray for inspiration as outwith my ken/experience.

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paddle steamer
22nd Sep 2016 15:34

N Ross Martin site may help re grace period if on point:


From 6 April 2011

•Losses may be carried forward even if the FHL tests are not met in three years.

•Under new "Period of Grace" provisions, where a property fails to meet the actual occupancy test, then provided that a property qualified as a FHL in one year, it may be deemed to qualify as a FHL for up to two following years. The owner must demonstrate that it was marketed and made available for letting.

Like you I cannot see the losses moving with the property, the losses are particular to the trade not the asset and when the trade ceases , subject to above I would expect the losses to lapse.

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