Investment loss impact on Corp tax and VAT

[94bb]

Hello,

I made a bad investment (crypto - no smirking please) last year via my limited and have now cashed out at a loss of £20k. Please could someone advise whether this will have an impact on Corp and VAT tax for the company?

Thanks in advance
Bb

[northernladuk]

Hello,

I made a bad investment (crypto - no smirking please) last year via my limited and have now cashed out at a loss of £20k. Please could someone advise whether this will have an impact on Corp and VAT tax for the company?

Thanks in advance
Bb

I think you need to understand the basics of how a company works.

[malvolio]

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?

[jmo21]

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

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

Hope he doesn't mean he has no money to pay his vat, or think that somehow he doesn't have to pay some part of the vat due to his losses

[Lance]

2...

[NotAllThere]

2...

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

[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?

[northernladuk]

Do you have an accountant?

[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.

[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.