Chapter 12: Companies - losses

Question 1

NEED TO LEARN : NOT IN REF

Answer 1

Property Business Losses

Capital Losses

Question 2

Capital Losses

Answer 2

Capital losses are offset against other capital gains in the chargeable accounting period to give a net gain figure to use in the corp tac comp.

Any excess losses must be carried forward to use against FUTURE CAPITAL GAINS ONLY

Question 3

Property Business Losses

Answer 3

Offset against OTHER INCOME OR GAINS

Any excess carried forward can be offset against ANY INCOME AND GAINS (Total profits before deducting QCD)

Question 4

Which is more flexible out of property business losses and capital losses?

Answer 4

Property business losses as can offset against any other income or gains in current year and any income or gains in future year

Question 5

Terminal loss relief

companies v sole trader

Answer 5

Last 12 months is the terminal loss

Can be carried back 36 months on a LIFO basis

Conmpanies can offset against total profits, sole trader against trading profits

Question 6

Choosing the relief considerations

Answer 6

Rate of tax

Cash flow

Loss of QCD

Question 7

Loss of QCD

Answer 7

Current year and Prior year claims are for the total profits and cannot be restricted, Losses carried forward the company chooses how much it wants to offset

Question 8

Carry back loss when prior period is less than 12 months

Answer 8

If the prior period in less than 12 months, you can carry back into the year before

For example : Last period was 9 months, you can use 3 months from period before