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Working through question 16 part a from the practice questions at the back, after figuring out the basis of assessment we find that the loss for 17/18 is loss in the first 12months which is also current year basis. Why then do we consider the overlap loss of the previous year and state the loss of the year as 9000, which is 12000 minus the 3000 loss of the first period 1st jan 16 to 6th april 16. Shouldn’t we consider the full 12000 as the loss and only on cessation would the overlap losses will be considered like overlap profits.
Have you read Chapter 7 section 5 page 50 or watched the lectures – there is no such thing as an overlap loss so that if a loss making period falls into more than one basis period then it is allocated to the first tax year into which it falls and is not available again in the second tax year in which it also falls
Yes, thanks for the reply I understand now. I’m amazed you understood my question because I was referring to 16/17 not 17/18 so I actually confused my self in trying to understand your response. We do not double count the loss like profits as there is no provision for the overlap. I did watch the video but I didn’t remember any talk about overlap losses and how they don’t exist. Thanks for the reply, please bear with me if it was a “not so smart” question lol I’m afraid more may be coming.
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