Realised profits 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....

Louwman v HMRC [2025] UKFTT 295 (TC) This appeal examined the taxpayer’s income tax liabilities for the 2018–19, 2019–20 and 2020–21 tax years. She was resident and domiciled in the UK throughout, having become deemed domiciled on 6 April 2018. Before that, she had settled shares into four offshore trusts. Those shares were in companies holding investments that produced offshore income gains (OIG) and accrued income profits (AIP) in the years in question. In outline, OIG are gains realised on disposing of an interest in an offshore fund that does not report its income to HMRC, while AIP are profits arising on the disposal of securities to the extent they represent built-up interest. As a general rule, OIG and AIP are treated as income of the year of disposal for the person making the disposal, or anyone treated as doing so. Owing to her deemed UK domicile, the remittance basis was not available in those years. Absent anything further, the OIG and AIP within the trusts (via the companies)...

CATS North Sea Ltd (CNSL) should not bear the uplift because it was not a deemed participant in the field where it continued a related company’s transport operations, and statutes bar transferring the incumbent’s oil business for tax purposes, the UT ruled. It also decided that the company’s participation status dictated the legal characterisation of the activities, even if, in practice, they were largely identical. The dispute concerned the interplay between several corporation tax provisions for oil businesses and a balancing charge, being an amount that HM Revenue and Customs (HMRC) adds to taxable profits when an asset is realised for more than its allocated value. HMRC applied its preferred balancing charge after a reorganisation under which CNSL, formerly a wholly owned subsidiary of Amoco Exploration Co LLC part of BP Plc, assumed Amoco’s interest in the Central Area Transmission System North Sea Oil and Gas pipeline (CATS Pipeline). Amoco sold its pipeline interest to CNSL for USD 1, and in 2015 then sold CNSL to Kellas for USD 388...

Stop Press : From accounting periods starting on or after 1 January 2026, the Diverted Profits Tax is superseded by the unassessed transfer pricing profits rules. This Practice Note, alongside Transactions in UK land—tax rules, examines the anti-avoidance provisions aimed at countering attempts to sidestep tax on income, profits or gains connected with arrangements concerning, or trades of dealing in, land. The main anti-avoidance measure seeks to treat gains of a capital character realised on the disposal of land as income, bringing them within income tax or corporation tax. Further detail appears in Practice Note: Transactions in UK land—tax rules. From 5 July 2016 these rules superseded and expanded the former transactions in land rules (for information on prior rules, see Practice Note: Real estate—anti-avoidance: disposals of land and taxing capital gains as income (pre 5 July 2016) [Archived])...

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...

The rise of equity financing: background to Mudaraba Interest-based, conventional funding often hampers economic justice, fairness and equity, as it burdens borrowers with liabilities that, in many cases, cannot be settled. Widespread inequality remains a severe global challenge, and Islamic financial models offer means to ease this. At the heart of Islamic banking and finance lies economic justice realised through risk-sharing. All parties to an investment are expected to participate in both profits and losses. As Ayat 8 of Surah Al Maidah in the Quran declares: O you who have believed, be persistently standing firm for Allah, witness in justice, and do not let the hatred of a people prevent you from being just. Be just; that is nearer to righteousness. And fear Allah; indeed, Allah is acquainted with what you do. Unlike conventional arrangements, which do not require tangible underlying assets, banks and financial institutions may expand credit by generating money from existing money rather than from assets. This stands in contrast to Islamic financing...