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Trade Losses

C/fwd and group relief

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A client has a Jan 19 year end whereby it is expected to make a tax loss of circa £300k (there are no other losses b/fwd)

A holding company is going to be set up shortly via share for share exchange etc. In the Jan 20 year, holdo will charge man charges to wholly owned sub and shareholders will be paid dividends from holdco.

I understand that post April 17 losses can now be transferred to group companies. But does it matter that the company was a single company in the ye Jan 19, if not I assume it can transfer the losses cfwd to ye Jan 20 to the new hold co?

The holdo will charge management charges of around £50k (with very little overheads) and subsidiary will hopefully make around £100k taxable profit in ye 2020 (after deducting man charges). If holdco cannot utilise losses this structure will not (in the short term) work well as it will not be making full use of losses bfwd and it will create a tax charge earlier than expected in the holdco in its first year.

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Replying to Tim Vane:
By SA2016
17th Apr 2019 15:15


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