Mixed tax dispute

Setting a corporation tax loss against income tax profit

The taxpayer had a permanent establishment in the UK through which it carried out its activity of trading in UK land. In the year to 31 March 2011 it made a trading loss of more than £2m.

It also owned several investment properties in the UK on which it earned rental income. This letting business was not carried on through a permanent establishment rendering the company liable to UK income tax on the profits arising from this business. It claimed to set off the loss arising from its trade against the profits of the letting business. HMRC refused saying the taxpayer was not entitled to relief under ITA 2007 s 64 because the legislation did not permit a claim on a loss that had it been a profit would have been subject to corporation tax....