It is a fact of life that sometimes a business or investment doesn’t work out. In this situation, you are going to end up with a loss; i.e. More money was spent than recouped.
In general, a loss can be used to offset other income or gains, as per the rules set out below.
But before that, there are three important rules about claiming losses that apply across the board:
A. If you make a loss in a situation where theby the profit would not have been taxable, the loss in such a situation cannot be claimed.
B. It is normally required that a loss be offset as soon as possible. If it is not, you will lose the right to use the losses in the future.
C. You can only carry forward losses into a new tax year if you file a tax return for the year you want to carry forward from. This is to allow the tax authority to check and agree the permissibility of the losses. This is of particular importance in the Voluntary Disclosure procedures.
Onto the details…