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Is an impairment loss tax deductible

Impairment loss on quoted investments

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 A client wishes to include in his company's latest financial statements,  a permanent loss on the difference between cost and market value .

He is asking whether this loss should be included in the Profit and Loss account  and whether it is tax deductible for corporation tax purposes.

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By Paul Crowley
16th Jul 2020 18:13

Such a long time since I had one of these.
Client had a managed portfolio. We showed as a current asset at market value. Deferred tax a real pain.
But CGT type rules for real sales, gains and losses.

If this is a tax question, I think not

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By johngroganjga
16th Jul 2020 18:37

How does he know the loss is going to be permanent? Does he have a time machine?

Revaluation gains and losses on quoted investments are not taxable or allowable for tax.

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Replying to johngroganjga:
Psycho
By Wilson Philips
16th Jul 2020 18:44

With the exception of bonds and other instruments falling within the LR regime (although I'm not sure if one would normally describe these as quoted investments)

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Replying to Wilson Philips:
By johngroganjga
16th Jul 2020 18:56

Yes I realise that

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Replying to Wilson Philips:
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By Paul Crowley
16th Jul 2020 19:33

Yes fixed interest stuff in that old one I referred to above. Real pain as prices included accumulated interest, on sale and purchase.
Long time ago, best forgotten, client eventually went to Money Market after getting singed.

Main selling point by introducer was no extra tax on the tiny dividends as FII.

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Replying to johngroganjga:
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By andrewMo
16th Jul 2020 19:26

I have already asked the client if he actually meant a revaluation instead of a permanent loss, so thanks for pointing that out
If it is simply a loss on revalution, would that leave a deficit on a revaluation reserve or just a non tax deductible debit to P&L?

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Replying to andrewMo:
Psycho
By Wilson Philips
16th Jul 2020 19:37

Fair value adjustments are taken to the P&L. But my understanding is that to the extent that they end up as part of the B/S reserves they are non-distributable until crystallised.

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