Can losses from one company be written of against profits in another?

Question

I have a couple of flats which are let out and generate a small income. I recently launched a small business, but things are very very slow. I will have spent about £5000 on the company which will have asets of about £1000, (the remainder, on adverts website, headed paper.... which has no value). Just wondering how teh IR would look at these losses

Answer 1

If you are self employed on both business, you can file them together (Each business will have its own accounts) The taxman should write one off against the other as far as profit and loss is concerned.
Each LTD company is treated as an individual and will be taxed by itself

Answer 2

It would have been a lot easier if both businesses had been run under one company to begin with, and then split up as things start to look up. Think about doing that in the next tax year. In the meantime the milk has already been spilt.

I don't know what the second company does, but I would suggest you get the profitable company to use its profits to buy into the second company, so that this will be treated as an expense of the profitable company and therefore reduce its profit for tax purposes, and also reducing the losses of the loss making company.

Answer 3

In order to offset the losses from one company against another you will need to form them together as a Group of companies, notify the IR and apply for group relief.
This is a common thing that large businesses do to reduce their tax liabilities, but it can be quite complicated so you should seek professional advice from your accountant.

Answer 4

In law (Company Law) each Company is a separate entity and what you are intending is illegal,in particular if you have Limited Companies,and yes if the I.R get wind of it you will be paying them a heck of a lot of money,because they will think you are doing dodgy deals even if you are not.
You would need to look through your Articles And Memorandum If you are LTD this sets out what you can do and,not do.
Try having a word with one of the advice agencies or law centres.

Answer 5

If the businesses are unconnected, I believe you will have to account separately for each. If one was a holding company for the other, or the two were different parts of the same business, the situation could be different.

Answer 6

Yes

Answer 7

Because you are recently launching the business I think that they will be lenient.

Answer 8

No both are separate and have their own accounts

Answer 9

I don't think you can

Answer 10

not normaaly