14. Company losses Flashcards
How are company property income losses treated? (6)
- Automatic relief
- Against TOTAL profits
- Can be carried forward
- Partial claims not allowed
- Offset before trading losses
- Offset before QCDs
How are company capital losses treated? (5)
- Automatic relief
- Against chargeable gains ONLY
- Can be carried forward
- Partial claims allowed
- Offset against chargeable gains income rather than showing the income and loss deduction separate
What are the four ways in which a company can use a trading loss?
- Current year
- Current year and prior year
- Carry forward
- Terminal loss
When can company trading losses be carried forward? (3)
After the following claims:
- Current year
- Current year and prior year
- No claim made previously
What is the key difference to remember when carrying losses forward?
Partial claims are allowed
When must a claim be made by?
What does this mean for current year claims?
Within two years of end of loss making period.
A ‘current’ year claim can be two years ago.
How do you apply losses carried back to periods shorter than 12m?
Loss can only be used against profits relating to the 12m previous so profits must be time apportioned
How do you apply losses to the current year if it is less than 12m?
Full relief is given in normal way.
Ignore fact perriod is shorter.
How is terminal loss applied?
On a LIFO basis for the 3 years prior to the loss making period.
What factors effect choice of loss relief?
- Tax saving: if CT rates differ
- Cash flow: do they need a refund or want to save in the future?
- Wastage of QCDs: carrying forward = no loss of QCDs.
