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Property Losses

Property Losses

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I have one of those blank moments. Ltd Co client has accumulated property losses and a current year chargeable gain.Can the company set the earlier years losses

against current years chargeable event.

I know that I should know the answer so please be kind.

Thanks a lot.

Replies (14)

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By johngroganjga
31st Dec 2015 06:35

No.

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By nogammonsinanundoubledgame
31st Dec 2015 06:53

Here you go ...

http://www.hmrc.gov.uk/manuals/pimmanual/PIM4200.htm

With kind regards

Clint Westwood

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By garforth
31st Dec 2015 08:21

Thanks for comments but this is what is confusing me
Property income losses

Your company or organisation might earn property income if, for example, it rents out business or other premises. Separate rules apply to losses on property income. These losses:

must be offset against other profits in the same accounting periodcan’t be carried back to be offset against profits from earlier accounting periodsmust be offset against other profits in the next accounting period if it can’t be used in the same period and hasn’t been used as group relief, as long as the property business is still being carried on in that accounting period

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Stepurhan
By stepurhan
31st Dec 2015 08:37

Profits not gains

A capital gain is a capital gain, not a profit.

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By garforth
31st Dec 2015 08:44

stepurhan

Thanks, penny finally dropped.

Thanks stepurhan,john and clint.

Much appreciated.

 

 

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By GaryMc
31st Dec 2015 09:12

Talking about companies here so a dissenting view

s62 CTA2010 comes in to play for companies

 

s5  So far as the loss cannot be deducted, it - 

    (a) is carried forward to the next accounting period, and

    (b) is treated for the purposes of this section as a loss made by the company in the UK property business in that period.

 

As it then becomes a 'current' period loss it is available for use against total profits which for a company includes chargeable gains.

 

All provided the property business continues in the period with the gain.

 

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By Tim Vane
31st Dec 2015 10:26

Surely that's missing the point. The OP was wanting to offset the loss against the current year's chargeable event. As pointed out this cannot be done, since the gain is a gain and the loss is not a capital loss.

The offset of property losses against total profits is separate and does not reduce the chargeable gain, only the total taxable profit. The fact that it has the same net result (assuming an overall profit for the year) does not mean you can offset the property loss against the chargeable event directly.

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By GaryMc
31st Dec 2015 10:32

Apologies

I didn't see the word directly in the question

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Replying to imbs:
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By brianheg
04th Jan 2016 12:11

Top bantz

GaryMc wrote:

I didn't see the word directly in the question

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By peterlashmar
04th Jan 2016 13:18

Property losses

From earlier comments I assume that the previous losses are revenue not capital. The rules are similar to personal income and gains. An income loss brought forward cannot be offset against a Capital Gain. Your CT software should not let you do that.

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By mjswebster
04th Jan 2016 13:33

I'm with GaryMc

There is a lot of misinformed comment in this thread! The rules are not at all similar to personal income and gains, they are completely different. A company's property rental losses can, and indeed MUST, be deducted from the next available total profits in a following accounting period (Section 62 CTA2010, as GaryMc has posted above). This is automatic, and does not require a claim. For CT purposes, "total profits" includes chargeable gains (Section 4(3) CTA2010), so the fact the total profits arise from a gain rather than a profit is totally irrelevant.

 

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By garforth
04th Jan 2016 15:17

Situation

Ltd Co. Client :

Has property losses brought.fwd.  

In this accounting period the company has a chargeable event. Made a profit when selling a house.

I read up on rules and came up with my posting above. Which is why I sort help..

Thanks for all help  Opinion clearly divided.

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By Lady Carrera
04th Jan 2016 15:40

Opinion is not divided.

There are just a few numpties who insist on contributing when they clearly do not have a clue what they are talking about.

The "chargeable event" you refer to gives rise to a chargeable gain which will form part of the company's total profits.

The company's brought forward property business losses are, if the property business is still being carried on, treated as a property business loss arising in the current period, which can be offset against the company's total profits (which will include the chargeable gain).

GaryMc has responed correctly, and Tim Vane has pointed out some semantics that are more to do with the imprecision of your OP than Gary's response. Apart from mjswebster's post and Clint's link, everything else is at best irrelevant and at worst just plain wrong.

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By peterlashmar
04th Jan 2016 17:57

property losses

This bad tempered steam shows the futility of trying to answer a specific question without any appreciation of the facts. That starts with th e totally imprecise description of a "property business" - developer, investor, agent, builder?  Those are all property businesses!

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