Kate Gott Corporate Tax Director

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Kate Gott

Corporate Tax Director

Kate joined Wilson Wright in 2016, having predominantly worked within the UK’s top 10 accounting firms over the previous decade.

She is a chartered tax adviser specialising in advising businesses and their owners. She works for a wide range of clients, including companies, LLPs and partnerships.

Her areas of expertise include research and development tax credit work, both international and domestic tax efficient structuring, transfer pricing, and due diligence. Kate also has significant experience of working with private equity structures and professional service firms.

She works closely with her clients to ensure they keep up to date with their tax compliance obligations and are aware of tax planning opportunities and changes to the tax legislation that may affect them.

1 May 2018

Finance (No.2) Act 2017 introduced significant changes to the way company losses arising on or after 1 April 2017 can be utilised.

Whilst the new regime has introduced a 50% loss restriction for larger companies, it is far more flexible for companies with taxable profits not exceeding £5m. Most losses carried forward can now be offset against future total profits or be group relieved.

New regime

Losses arising from 1 April 2017, and carried forward to subsequent accounting periods, are now available for offset against the total taxable profits of the previously loss making company.

In addition to this, losses incurred from 1 April 2017 are available to surrender between 75% group members. This should help to avoid the situation where losses become stranded in a particular group company, despite the group being profitable overall.

Terminal loss relief

The rules also make changes to terminal loss relief claims.

Where a company ceases to trade in an accounting period it will be able to set any unrelieved trading losses, arising from 1 April 2017, against total profits arising in the final three years of trading. Currently only losses arising in the final twelve months of trade can be offset against profits of the same trade in the final three years.

Accounting period

If the company has an accounting period which straddles 1 April 2017, the company will be treated as having two notional accounting periods for the purposes of determining which profits and losses are eligible for relief under the new regime.

Restrictions

Large companies

Restrictions are imposed on larger companies where profits are in excess of £5 million. Such companies are only able to utilise brought forward losses against 50% of their profits in excess of the £5 million allowance.

The allowance is split between group companies and one company will need to be nominated to report this split to HMRC each year.

Anti-avoidance

There are a number of anti-avoidance measures in place to prevent abuse. For example, the regime will not apply to the acquisition of a company with carried forward losses.

Capital losses

The new regime does not include capital losses. As such, capital losses continue to be restricted to utilisation against capital gains. Capital losses can not be utilised against total trading profits and cannot be group relieved

For more information please contact Kate Gott, Senior Tax Adviser at Wilson Wright.