UK Deferred tax asset after the underlying property has been sold

[broadex]

Company 'A' has only one asset, a property, which was sold before year-end at a loss of £1m. The company is part of a Capital gains group (A UK tax concept - which means the capital gains/ losses can be used by another group company 'B' ) once it has disposed of its asset. The directors have the view that Company B, another group company, will eventually sell its property at a huge profit, and utilizes the capital losses in Company A.

Normally on disposal of property, deferred tax asset/liability is cleared on the Balance Sheet, but the directors believe the deferred tax asset should be left on the balance sheet for possible future use of another group company. Any thoughts.

 

[hirschcogmail.com]

Hi
Companies in the same gains group can jointly elect for a gain or loss arising to one group company to be transferred to another group company. The election can only be made if the no-gain / no-loss transfer rule would have applied had there been a transfer of the asset between the companies making the election. This rule allows gains and losses to be brought together within one group company so that the loss can be offset against the gain.

Kind regards