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is this a non-trading loan relationship profit?

Interest received on rent deposit returned

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A limited company has unused trading losses brought forward and has made a trading loss in the current year.  In the current year they moved out of their rented business premises (when their lease expired) and their rent deposit was repaid with £200 of interest. Would I be correct in treating this interest as a non-trading loan relationship profit chargeable to Corporation Tax (like bank deposit interest received) or could it be set-off against the losses?

 

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Hallerud at Easter
By DJKL
22nd Feb 2021 21:51

It is a NTLR Credit but what is the issue offsetting the losses against it?

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Replying to DJKL:
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By southdown accountancy
23rd Feb 2021 12:33

Thank you for your reply. That's good it can be offset against the losses. Is that the same for bank deposit interest?

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Replying to southdown accountancy:
Hallerud at Easter
By DJKL
24th Feb 2021 10:38

The losses can be offset against it is more accurate, the losses do the offsetting rather than the profits doing the offsetting.

Yes, bank interest received may well be a non trade loan relationship credit, I certainly treat it as such in our accounts but we do not have a trade. It does often get trickier with the debits, interest paid can be a trading expense or a NTLR debit, as can bank arrangement fees

This might assist:

https://www.gov.uk/hmrc-internal-manuals/corporate-finance-manual/cfm32030

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Replying to DJKL:
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By southdown accountancy
24th Feb 2021 12:47

Thank you for that and the link to the Corporate Finance Manual which I had already had a look at. Where it states that non-trading credits like bank deposit interest are chargeable as income, can losses be offset against it to wipe it out?

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Replying to southdown accountancy:
Hallerud at Easter
By DJKL
24th Feb 2021 13:00

Losses offset in various ways but generally new b/fwd losses (post 2017) can be set against total profits.

This might be useful-

https://www.accountancyage.com/2018/02/07/corporation-tax-losses-newly-f...

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Replying to DJKL:
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By southdown accountancy
24th Feb 2021 14:57

Thank you for confirming that and for the article.

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