Realised losses meaning

Nigel Barklem v HMRC [2024] EWHC 651 (Ch) Film 2K incurred substantial tax losses in the 1999–2000 and 2000–2001 tax years (the Relevant Years). These were presented as trading losses and allocated among the partners in line with TMA 1970, s 12AA. For those years, the Claimant submitted self-assessment returns claiming sideways relief for his share of the partnership losses pursuant to what were then sections 380–381 ICTA 1988. To obtain such relief, ICTA 1988, s 381(4) required that Film 2K’s activities amounted to a trade conducted on a commercial footing, with profits that could reasonably be expected to be realised. HMRC opened enquiries into Film 2K’s partnership returns for each of the Relevant Years within time. It also told the Claimant that enquiring into the partnership return triggered deemed enquiries into his personal return under TMA 1970, s 28B(4). Under that provision, if the partnership return is amended, HMRC may amend each partner’s self-assessment to make matching adjustments giving effect to the partnership amendments, issuing Section 28(4) Notices....

Edward Cumming Bruce v Revenue and Customs [2022] UKUT 233 (TCC) Following the Court of Appeal’s decision in Mansworth v Jelley [2002] EWCA Civ 1829, together with an associated HMRC press release in January 2003, the taxpayer sought to claim capital losses by making in-time amendments to previously submitted tax returns. He wrote to HMRC enclosing revised computations of losses realised on the disposal of shares acquired under an adjustable share option scheme, together with detailed changes to the capital gains tax (CGT) calculation pages in the relevant returns. HMRC opened enquiries into the relevant returns pursuant to TMA 1970, s 9A, and later closed those enquiries on the footing that the asserted losses were not allowable. The question on appeal focused on whether the taxpayer’s notifications of capital losses were free-standing claims or whether they formed part of his tax returns, that is, incorporated within the returns themselves rather than advanced separately from them. If they were free-standing claims, then indeed, as ...

The capital gains regime allows corporate groups to organise the offset of allowable losses arising in one group company against taxable gains arising in another. The most straightforward route is to elect to move a gain or a loss between companies within the group. That election rests on the premise that group members function, in many ways, as a single economic unit, and that the tax code ought to mirror that reality. The purpose of the provisions is to enable groups to net gains and losses against each other where both the gains and the losses arise within the same group. This treatment is not meant to apply to companies acquired into a group specifically because they already carry losses. The pre-entry loss rules exist to stop groups from cutting their gains by purchasing losses in this fashion. Although intended to counter avoidance, the pre-entry loss rules can bite regardless of whether the parties involved are driven by tax motives, and they apply even where tax considerations are not the...

Tax is a key consideration when selecting an appropriate structure for holding UK commercial property. The prevailing route for investing in UK commercial property is typically a UK‑incorporated, tax‑resident limited company. Non‑UK investors have also gravitated towards offshore ownership for investment, commonly via a non‑UK resident special purpose vehicle (SPV). Following reforms to the taxation of gains realised by non‑UK residents on UK immovable property from 6 April 2019, and to the taxation of property income of non‑UK resident companies from 6 April 2020, non‑UK resident companies that hold UK commercial assets now fall within UK corporation tax on gains (subject to certain exemptions) and on rental income. As a consequence, a number of the core tax attractions of using non‑UK resident SPVs to own UK commercial property have been curtailed. Nevertheless, acquiring UK commercial property through an offshore SPV remains a widely used and popular structure for many investors. It can still continue to provide a saving in stamp duty land tax when compared with purchasing the underlying...

A recurring scenario is that payments are made on account of dividends during a financial year, with the expectation of declaring a dividend at the year end. If the company fails, there are then no distributable profits from which a dividend can be declared and the on‑account payments, often treated as loans, are recoverable. In private companies, directors/shareholders are frequently advised to adopt this approach as a tax‑saving measure... When can dividends be declared? Under Part 23 of the Companies Act 2006 (CA 2006), distributions may only be made to members out of profits available for that purpose. A company’s profits available for distribution are its accumulated, realised profits, so far as not previously applied by distribution or capitalisation, less its accumulated, realised losses, so far as not previously written off in a reduction or reorganisation of capital... The amount of profits available for distribution is determined by reference to the company’s last annual accounts, subject to two exceptions: where the distribution would breach...