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Leekes Ltd and corporate loss streaming
KEY POINTS
- Treatment of losses when a company succeeds to the loss-making business of another.
- Section 343(3) should be interpreted as allowing the losses as if they had been sustained by the successor company.
- The tribunal preferred to look at the commercial reality of what took place.
- Likelihood of HMRC appealing and changing their argument to say s 343(8) should apply.
The recent decision of the First-tier Tribunal in Leekes Ltd (TC4298) throws light on the requirement to stream trading losses when one company succeeds to the loss-making trade of another.
It is significantly the first case on this subject since Falmer Jeans Ltd v Rodin 63 TC 55 in 1990.
The facts
Leekes owned four out-of-town department stores. It purchased Coles a company with three furniture stores plus warehousing...
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