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To carry or not?

01 April 2014
Issue: 4446 / Categories: Forum & Feedback , trading losses , Business

A property development company has substantial trading losses at the end of its first accounting period. In the second accounting period, no trading activity took place and the losses were simply carried forward

Our client is a limited company whose principal activity is property development and there were substantial trading losses to carry forward at the end of the first accounting period. No trading activity took place in the second accounting period and the trading losses were simply brought forward and carried forward.

If the company resumes the same trading activity in the third accounting period will the trading losses from the first accounting period be available to be set off against the trading profits in the third accounting period or will HMRC deny these because there was no trading activity in the second period?

Naturally the client would prefer not to lose any tax relief that might be available.

Query 18 362– At A Loss

Reply from Historian

The leading case on carry-forward of trading losses is still Kirk & Randall Ltd v Dunn 8 TC 663 ...

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