Sole trade losses and incorporation

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Psyche
Psyche Registered Posts: 187 Dedicated contributor 🦉
in General accounting discussion
Hello,
I have a sole trader client who has been running his business at a loss. It's a pub and he made significant investments in the first year, and has probably made a profit for 2013-14 (I don't have the figures yet) but there will be an overall loss brought forward.
He wants to incorporate for liability reasons, and the limited company will rent the premises from the building's owner and carry on the trade.

My question is if he incorporates, does he essentially forfeit the losses brought forward he incurred as a sole trader? Is there any way to bring those forward into the new company so that he can get relief?

Thanks!

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  • KernowAccountant
    KernowAccountant Registered Posts: 103 Epic contributor 🐘
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    Take a look at ITA 2007 s.86.
  • Psyche
    Psyche Registered Posts: 187 Dedicated contributor 🦉
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    Thank you!
  • stevo5678
    stevo5678 Registered Posts: 325
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    Very interesting, never come across that!
  • shellsbook
    shellsbook Registered Posts: 12
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    KernowAccountant said:

    Take a look at ITA 2007 s.86.

    This is very useful. Where it says it can be claimed if relief hasn't been given under any other tax provision - I guess that would include Tax Credits? So if the business loss had been offset against earned income in the Tax Credits declaration, that would be it used up - is that correct?

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