Tyas & Company
Chartered Accountants, Registered Auditors, Tax, Business Advisors
Thursday, 11 July 2019 23:01

Loss buying restrictions

Under qualifying circumstances, Corporation Tax (CT) relief is available where your company makes a trading loss. The trading loss can be used by offsetting the loss against other gains or profits of your business in the same or previous accounting period. The loss can also be set against future qualifying trading income.

However, there are restrictions on ‘loss-buying’. This describes the situation where a person buys a trading company wholly or partly for its unused trading losses rather than solely for the inherent value of its trade or assets. The new owner usually introduces new activity into the company to try to keep its entitlement to relief for losses.

The legislation governing this area can result in all the company’s unused carried- forward trading losses being cancelled where either:

  • within any specified period, there is both; a change in the ownership of a company, and a major change in the nature or conduct of a trade carried on by the company,

or

  • there is a change in ownership of a company at a time when the scale of its trading activities has become small or negligible.

For accounting periods beginning on or after 1 April 2017, the specified period is 5 years beginning no more than 3 years before the change in ownership occurs.

Consultants

Stephen Tyas                             Stephen Ayres

 

 

Registered to carry on audit work in the UK as GBJ
Limited Liability Partnership by the Institute of
Chartered Accountants in England and Wales

Contact Us

Telephone: 01293 843900

Fax: 01293 614312

Email: office@tyas.com

5 East Park, Crawley, West Sussex, RH10 6AN

 

 

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