How to set off earnings agaisnt previous losses on Tax return

[FreddieP]

Hello,

A few years ago, I embarked on a private house refurbishment project for a profit. For personal reasons, I incurred substantial losses on completing the project meaning I only recovered part of what I invested and had no profit. I entered the money, on the tax return, each year as a loss as I would not recover any money (and get a profit) until I sold the house. It took me 3 years. In tax returns:
Year 1: loss of £127,000 (all the money I invested in buying the house and refurbishment costs)
Year 2: loss of ££18,000 (refurbishment costs)
Year 3: loss of £12,500 (refurbishment and maintenance)
Year 4: received only £65,500 from the sale of the house (not profit, just what I recovered of the investment). This is what I need to enter in the tax return for the year.

Obviously, I do not want to end up paying tax on that money as if it was a capital gain. How do I relate it to the previous money I invested?
Thanks.

[robbob]

Hello FreddieP

I think you need specific skilled paid for advise asap - it sounds like what you have declared is wrong and therefore may need rejigging, i get the impression based on what you have posted that you don't understand the principles involved and could be liable to a potential large penalties so the sooner this is sorted by someone who knows what they are doing the better.

Note i don't often recommend that people should specifically not put things right themselves but this is anything but a simple area to advise on, without full facts and knowledge of what was done when and why any comments posted here by anyone could give the wrong impressions rather than the right impressions advise wise.