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Setting income tax losses against property profits for resident sole director.
FarCo a non-resident company owns a large UK commercial property which is let to a third party. The company receives rental income and pays mortgage interest which usually would result in a net profit. The profit would then be included within the company’s non-resident landlord return and subject to income tax at the basic rate. However a substantial loss is brought forward from FarCo’s early years in which interest payments exceeded rental income. Over the past few years profits arising were covered by the loss resulting in a nil tax liability. Consequently the loss available now is relatively small so that in 2017-18 the company would expect a tax liability on its profits.
There is a slight tweak to the case in that the sole shareholder and director had moved to the UK on 1 April 2018. It is considered that the director’s residence status...
