Reply to: Investment loss impact on Corp tax and VAT

[WTFH]

No need for churlish undertones.

The article implies profit / loss on the transaction would be exposed to corporation tax. So if a £10k profit was made, this portion would be relevant for CT, same for loss.

The learned gents above set me straight on the application of VAT.

Nothing churlish, just trying to work out how you think CT & VAT work.

You stated in an earlier post that the investment was around 10% of your revenue.
If you invested £50k and lost £20k, then you came out with £30k, which would mean you're claiming an annual turnover of £500k. If you mean you invested £20k and lost every penny of it, then you're saying your annual turnover is £200k.

But if your company profits last year were £30k and this year they are £10k, it doesn't mean that you get a CT rebate (£20k loss being greater than £10k profit) because you gambled the money and lost.

[94bb]

No.

You can't write off the loss against tax.
If you had made a profit, would ALL the profit have been given to the taxman, or just a %?

Do you understand what has been said about VAT, or do you still think that you can claim back VAT on something you didn't pay VAT on in the first place?

No need for churlish undertones.

The article implies profit / loss on the transaction would be exposed to corporation tax. So if a £10k profit was made, this portion would be relevant for CT, same for loss.

The learned gents above set me straight on the application of VAT.

[WTFH]

So it looks like a loss is corporate tax deductible!

No.

You can't write off the loss against tax.
If you had made a profit, would ALL the profit have been given to the taxman, or just a %?

Do you understand what has been said about VAT, or do you still think that you can claim back VAT on something you didn't pay VAT on in the first place?

[northernladuk]

Wow! No one ever said that before (right, Mal? )!

Or written in an article he's just quoted back.

[WordIsBond]

So it looks like a loss is corporate tax deductible!

Wow! No one ever said that before (right, Mal? )!

[94bb]

This help?
Revenue and Customs Brief 9 (2014): Bitcoin and other cryptocurrencies - GOV.UK

“The profits and losses of a company entering into transactions involving Bitcoin would be reflected in accounts and taxable under normal CT rules
IT - the profits and losses of a non-incorporated business on Bitcoin transactions must be reflected in their accounts and will be taxable on normal IT rules
Chargeable gains: CT and CGT - if a profit or loss on a currency contract is not within trading profits or otherwise within the loan relationship rules, it would normally be taxable as a chargeable gain or allowable as a loss for CT or CGT purposes. Gains and losses incurred on Bitcoin or other cryptocurrencies are chargeable or allowable for CGT if they accrue to an individual or, for CT on chargeable gains if they accrue to a company

So it looks like a loss is corporate tax deductible!

[mudskipper]

Would appreciate your insights on my first paragraph, ie investment loss can only be offset against an investment gain, and not corporation tax. The professional advice I have sought from two accountants: one agrees with the above, and the other conflicts stating I can offset against Corp tax. I’m now left confused, hence my post.

This appears to answer your question

Changes to Corporation Tax Loss Relief | Myers Clark | Watford

"These new rules do not affect the treatment of capital losses carried forward in a company. Any capital losses can still only be offset against capital gains in the same company and not against other profits. "

re: VAT - you can only reclaim VAT paid - if you bought an electric car it would be subject to VAT, so you can claim the VAT back. Your investments were not subject to VAT (I'm assuming) so nothing to reclaim. VAT is nothing to do with profits/loss.

[northernladuk]

This help?
Revenue and Customs Brief 9 (2014): Bitcoin and other cryptocurrencies - GOV.UK

[94bb]

Could you post after the quote please. Its really confusing when you've got to read your reply and then the quote to find the context.

Do you have your own accountant?

I do, he was one of the chaps who provided one of the inputs I have received. I’m also cognisant this isn’t a run of the mill case study, applications of the regs may be interpreted and applied differently. I’m keen to understand what you learned folk think, especially with offsetting corporation tax.

[northernladuk]

Would appreciate your insights on my first paragraph, ie investment loss can only be offset against an investment gain, and not corporation tax. The professional advice I have sought from two accountants: one agrees with the above, and the other conflicts stating I can offset against Corp tax. I’m now left confused, hence my post.

Could you post after the quote please. Its really confusing when you've got to read your reply and then the quote to find the context.

Do you have your own accountant?

[94bb]

Would appreciate your insights on my first paragraph, ie investment loss can only be offset against an investment gain, and not corporation tax. The professional advice I have sought from two accountants: one agrees with the above, and the other conflicts stating I can offset against Corp tax. I’m now left confused, hence my post.

I rather hope not....

OP - we can't answer, we don't know enough. But if you're working on the belief that: having a Mickey Mouse company creates a magic money tree, you're in the wrong job.

Get professional advice.

[malvolio]

Do you have an accountant?

I rather hope not....

OP - we can't answer, we don't know enough. But if you're working on the belief that: having a Mickey Mouse company creates a magic money tree, you're in the wrong job.

Get professional advice.

[northernladuk]

Do you have an accountant?

[94bb]

Hi - thanks for your response. I was informed by someone else that the loss can only be used to offset profits made against profits for another investment, and therefore can not be used to decrease Corp tax eg if I made a profit of £30k, only £10k would be eligible for CGT

This investment was around 10% of revenues, so I’m not aware of a reclassification of SIC code, given the proportion. Have you come across any texts that could help the case for your point 2 below? I have enough funds to cover all my liabilities, I was just enquiring whether the crypto trade loss would reduce them.

For point 1 below, I came across the electric car incentive and one of them was being ‘tax deductible’, if purchasing the car for business purposes, I assumed (possibly incorrectly) if the car was £50k, you can claim back £10k in VAT. Applying the same principle of a tax deductible asset purchase to a trading loss led to my conclusion.

Well yes, clearly the OP does. However, briefly:

1. VAT has nothing to do with it. Why do you think it does?

2. CT is charged on profits. If you've made a loss then yes, it will have an impact on the CT due.

3. Be careful YourCo doesn't get reclassified as an investment vehicle: always possible if your speculating with its money. If it does, your tax position will be a whole lot worse.

4. What else don't you know?

[NotAllThere]

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Checked the obvious, but nothing so far. Watching...