19 Mar 2019

Appeal refused in Leekes loss streaming case

Supreme Court refuse taxpayer permission to appeal in the Leekes loss streaming case. 

It looks like the end of the line for the loss streaming appeal by Leekes as the Supreme Court refused the taxpayer permission to appeal because the application did not raise an arguable point of law.

The taxpayer had argued that where there had been a succession in the case of the transfer of the whole of the trade, the streaming rules set out in s343(8) did not apply and there was no other requirement to stream. Essentially losses transferred were available for offset against the whole of the profits of the merged trade.

The taxpayer was successful at the FTT but has lost at both the UTT and the Court of Appeal and now the Supreme Court refused the taxpayer permission to take the issue further. Full details of the facts and previous decisions were set out in our news brief of 13 June 2018.

Where this leaves us is that streaming will apply to pre 1 April 2017 losses on a transfer of all or part of the trade. However, for losses generated post 1 April 2017 the new loss offset rules mean that this is no longer an issue for transfers of non-ring trades.

For ring fence trades the position is not so clear cut. Whilst we believe there are good arguments that streaming may not, in practice, apply, to post 1 April 2017 losses the position is far from straight forward and companies contemplating any restructuring including ring fence losses will need to look very carefully at the position.

Please contact Ian Hack, Paul Rogerson, or your normal CWE contact if you would like to discuss  


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