Trading Losses

by **vorabj** on Wed Mar 23, 2011 4:20 pm

A Limited Co has £350,000 of trading losses b/f and expects a further trading loss of £100,000 this year.

An opportunity has arisen to purchase a similar existing business which is profitable.
The trade acquired will be combined into with the existing business.

Can losses of the existing business be used against the combined profit of the two businesses ?
or will the profit of the other business be treated separately - meaning two P&L will need to be prepared?

Thanks

by **innovativetax** on Wed Mar 30, 2011 12:20 pm

Trading losses b/fwd can only be set-off against trading profits of the same trade.

by **nakmeister** on Mon Apr 11, 2011 2:30 pm

As innovative tax has said, b/fwd losses can only be offset against profits of the same trade. You will therefore have to separate results of the original business from the acquired business going forward, until the losses are used up.

by **tom 7000** on Thu Apr 14, 2011 2:45 pm

Yeah, but both businesses do the same thing ie sell cars...

So thats ok then the losses can be offset

by **section 44** on Thu Apr 14, 2011 3:45 pm

tom 7000 wrote:but both businesses do the same thing ie sell cars...

Comparable cars?

by **vorabj** on Sun Apr 17, 2011 12:53 pm

Both business are private schools - up to secondary level..

by **Incredulum** on Mon Apr 18, 2011 10:27 am

In which case it is obvious that you have two separate businesses that can easily be separated for tax purposes.

by **tom 7000** on Thu May 05, 2011 8:51 am

but its the same trade, I could see how if one was cars and the other a school, but if the two parts do the same thing....i]someone convince me?

by **Incredulum** on Thu May 05, 2011 9:28 am

It's not that they look like two separate trades; it's that for TAX purposes the LAW requires that you TREAT them as separate.

Sorry, there's nothing to convince you with, it's just a fact that you have to accept.