Any Answers Answered: Overlap profit and AIA

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Back after their summer break, TAXtv hosts Tim Good and Giles Mooney tackle AccountingWEB member queries on an unusual overlap relief situation and annual investment allowance for a group of companies.

To watch the full video of Good and Mooney answering readers’ questions, click here or scroll down to the bottom of the page.

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Overlap profit in final year of trading

The first question this month comes from an anonymous partner in a firm who asks:

“We had a very good first year, such that I have a large amount of overlap profit for Aug-April period. I will be leaving the partnership this month but we have had a poor earnings year such that my tax will be much less than the overlap profit I originally paid… Can I apply to get the residual relief back or will it be lost to HMRC?”

At time of writing the question had only generated one answer from the AccountingWEB community, but Good was keen to answer the query because “it’s too easy to overlook the availability of overlap relief”.

The full answer can be viewed from the start of the video.

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AIA and group of companies

For our second and final question, the duo turned to AccountingWEB eccentric Mrbailey, who had a query on annual investment allowance and how it relates to groups.

“I get the feeling that where you have a company which owns two others that only one AIA is allowed,” asked Mrbailey, “is this correct? If so can the limit say £200,000 be shared?

“Also what’s the position with associated companies? For example, Bill and Ben are directors of three companies as 50/50 shareholders. The three companies are independent of each other but share common ownership. Of course, the directors apply inter company management charges between the companies when prudent to do so.”

Good stated that the availability of the annual investment allowance is an important point, and went on to say that the rules were a little more complicated than at first glance.

The full answer can be viewed from 4m24 into the video.

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Full video

For the latest episode of TAXtv visit PTP Interactive. TAXtv is a monthly tax update programme available as an annual subscription from £199, (11 issues plus special editions) to view online, download from the internet or watch on DVD.

About Tom Herbert

Tom is editor at AccountingWEB, responsible for all editorial content on the site. If you have any comments or suggestions for us get in touch.

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