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Merger of trades and losses

Merger of trades and losses

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We act for two companies under common ownership.  It is our understanding that if there has been a transfer of trade between two companies in common ownership, then losses brought forward from the old company can be carried forward and offset against future profits.  How does this happen on the CT600?

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By Huw Williams
04th Nov 2013 12:44

Is this a merger?

I am not sure I understand the question.  Trade losses would have been shown on the old company's CT600 and will be shown in the same way on the new company.

More of an issue is the use of the losses as they can only be used against profits of the same trade - so if you change the trade (and a merger might change both former trades) then you lose the losses.

I remember trying to keep track of old trades within a company so that we could continue to utilise the old trade losses.  A pain (depending on the way the books were kept) but worthwhile if the numbers are big enough.

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By Richardrussell
04th Nov 2013 13:44

Thanks Huw.  Yes it is the

Thanks Huw.  Yes it is the same trade.  I realise that the losses incurred in the old company will appear on their tax return.  However, how do I show them on the new company's tax return?  Is it simply a loss brought forward?  Is there a special box on the full tax return?  Or do I need to write to HMRC?

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Replying to bernard michael:
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By Huw Williams
06th Nov 2013 15:21

Loss brought forward

It is simply a loss brought forward. 

The tax computation will show all the detail / explanation about where it came from.

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By Richardrussell
06th Nov 2013 16:33

Thanks Huw, thought it might be something like that.

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