CT Loss Relief

Question 1

what is the value of losses called

Answer 1

tax savings

Question 2

how to convert loss to tax saving

Answer 2

loss * 12.5%

Question 3

how to convert tax savings to losss

Answer 3

tax saving / 12.5%

Question 4

against what trades can a trade loss be used against in same period

Answer 4

any other trading period

Question 5

against what trades can a trade loss be used against in the following periods

Answer 5

only against the same trade

Question 6

what is the requirement to bring back trade losses

Answer 6

must be against corresponding periods ie periods of the same length

Question 7

what is surrendering in relation to groups

Answer 7

when a company gives a loss away to another company within their group

that company can completely receive the loss and use it as their own

Question 8

can you surrender losses carried forward

Answer 8

no, only current period losses

Question 9

can losses transfer in both directions between parent and subsidary

Answer 9

ues

Question 10

what is the definition of a group for loss purposes

Answer 10

if one company is a 75% subsidiary of another

or both 75% subsidiaries of a third

Question 11

what section number relates to surrendering losses

Answer 11

S420A

Question 12

what is the surcharge for groups for late filing

Answer 12

normal surcharge

+

group relief restricted (reduced by 25%)

Question 13

what is the anti avoidance rule for intra group transfer of assets

Answer 13

if a company leaves the group within 10 years of asset transfer, the tax that would have been paid becomes payable by the company that received the asset

Question 14

can a company transfer capital losses from one company in the group to another

Answer 14

no

Question 15

how might companies plan capital losses

Answer 15

transfer assets from one company to another no gain no loss

sells both
gain on one
loss on the other
can use capital loss

Question 16

two types of revenue audits

Answer 16

desk audit
field audit

Question 17

what does value basis of using losses mean

Answer 17

use losses to reduce corporate tax liability

must get tax savings equivalent value of trading losses

Question 18

in what order are trade losses used

Answer 18

1. against trading profits current period
2. against trading profits previous period
3. against corp tax in current period on value basis
4. against corp tax in previous period on value basis
   (these can only be against case 3-5)
5. carried forward to the next period against the same trade

Question 19

how to handle trade charges

Answer 19

1. add back amount in spl
2. identify amount paid
3. fax relief for the paid amount
   - reduce CT liability before value basis
   - excess added to trading losses to be carried forward (in loss memo)

Question 20

how to handle non trade charges

Answer 20

1. add back amount in sopl
2. identify amount paid
3. tax relief for paid amount
   - reduce total profits