S86 Income Tax Act 2007 (ITA 2007)

How to enter on SA tax return

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Hi everyone

I have a client who incorporated their sole trader business and at incorporation had circa £6k of losses carried forward from the ST business.

I have limited experience of this, but understand from the HMRC manuals that we can claim the losses on his SA tax return under S86 IT Act 2007 against income withdrawn from the ltd co.

My question is twofold as follows:

- am I correct in that the loss needs to be used at the earliest available opportunity regardless of the level of income derived from the ltd co (e.g. if only £5k salary in year one of incorporation, you must use £5k of the available loss to write-down the earnings)

- where on the SA return should the loss be entered? Should the self-employment pages be maintained and used to offse tthe loss against the income?

 

TIA

Replies (3)

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By Justin Bryant
24th Nov 2020 09:12

I vaguely recall this is done as a stand alone claim (e.g. by letter) outside the return, but I could be wrong.

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim85060

It must be made within 4 years of 31 January per the links below

https://www.gov.uk/hmrc-internal-manuals/self-assessment-claims-manual/s...

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim85075

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Scooby
By gainsborough
18th Nov 2020 11:53

Hs227 states that "you should complete the ‘post-cessation trade relief and certain other losses section’ of the additional information pages" (which is box 6 of Other Tax Reliefs on Ai2).

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Replying to gainsborough:
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By simonhyett
24th Nov 2020 08:32

that's extremely helpful - thank you for taking the time to post

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