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Utilising losses

Post April 17

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I have just taken on a new client and in reveiwing their last two CT returns, I believe they maybe incorrect. The info is as follows:

2019

Trade Loss of £50k C/Fwd (all post April 17)

Non trade loan relationship deficit C/Fwd (£10k) relates to Director loan w/Off

 

2020

Further small trade loss made resulting in C/Fwd trade losses of £55k at end of year

Connected party loan write off (non trade profits) £100k

The comp shows tax due on the £100k at 19% but they havent utilised the b/fwd trade losses or non trade loan deficits b/fwd which I thought was now possible? Or is the issue that the NTP's relate to a connected co loan write off? 

 

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By aidious
05th Jul 2022 13:02

Hello

Do we know why the connected party loan write off was taxable? Usually they wouldn't be if the loan was a loan relationship and it was released formally (but sometimes they aren't released in the right way and the credits are taxable, which is perhaps what you have here).

If the credit is taxable, and cfwd losses all arose in your company and there are no change in ownership rules blocking the use of losses, then there is no reason I can think of as to why you can't use post 1 April cfwd trade losses or NTDs (subject to an appropriate claim for the group deductions allowance, but even without that, £50k should be available).

Hope that helps. Ask your client to ask their previous advisor.

Cheers

A

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