Can I write off previously incurred undeclared capital losses against gains?

P

paul_m

Guest
Just wondering if you can write off capital losses against capital gains retrospectively?

Example:-
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In my case I did alot of share dealing in 2002,2003 & 2004, but I never did tax returns on the transactions. There were years where I made losses. I want to know if I now come clean and do a return for all these years can I write off losses against gains in years gone by.

An accountant told me that you can only carry forward losses if you do the tax return within the alloted time for doing a return for the year the capital loss occured. Is he correct?
 
Yes you can. You are only obliged to make a capital gains tax return if you are chargeable to capital gains for the relevant period. In previous years you made losses and therefore had no losses. You can now carry those losses forward to use against your current gains.
 
Zaire said:
Yes you can. You are only obliged to make a capital gains tax return if you are chargeable to capital gains for the relevant period.
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Are you sure about that? Can you quote something authoritative on this?
 
Per Revenue's CGT guide pg 10:
"Allowable losses are set off against chargeable gains of the same year and if the losses exceed the gains, the excess may be carried forward against gains of later years."

So losses were made in previous years and they can be carried forward if 'allowable'. The general rule is that if a gain on the disposal of the asset would have been subject to CGT then the loss is allowable. There are various restrictions re indexation, connected persons and residency issues which I won't go into here.

The next issue is whether paul_m was obliged to return details of these losses for the years in which they were made.

per pg 26 of Revenue's CGT guide:
"A return of chargeable gains must be made on or before 31 October in the year following the year of assessment."

In my opinion the obligation to make a return occurs on the making of a chargeable gain not on the disposal of an asset which resulted in an allowable loss.

I can find no references that disallow capital losses as a result of not doing a tax return.
 
Zaire said:
In my opinion the obligation to make a return occurs on the making of a chargeable gain not on the disposal of an asset which resulted in an allowable loss.
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So it's just your opinion? I suspect that you are wrong and that a return is required whether or not there is any actual liability.
I can find no references that disallow capital losses as a result of not doing a tax return.
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Have you read the TCAs and Tax Briefings on this stuff?
 
I fully agree with clubman here, the obligation is on the tax payer if he sells any asset regardless if he makes a profit to make the appropriate return. This is even applicable if you sell your PPR, but in general this is not done as it is taken as given, been a while since the revenue purged this
 
I have never seen Revenue disallow CGT loss relief on the basis that the original loss was not notified to them at the time. As far as I can see, there is no mention in any of the prominent CGT technical texts (ie from Irish Taxation Institute and similar sources) of any requirement to file CGT returns in respect of losses in order to preserve entitlement to carry forward losses to future years.

Even if such a requirement does exist, I honestly can't imagine the Revenue exercising any powers they have in this regard unless they have reason to believe that the original non-disclosure involved, or was part of some sort of subterfuge or other underhand practice on the part of the taxpayer (eg if the taxpayer failed to file a Form 11 return in respect of self-assessment income).

Unless the OP's capital gains or general tax history is somehow unusual or irregular, I wouldn't see this as an issue.
 
I agree - but I still suspect that, strictly, the obligation to file a return whether or not there is any liability stands. Can anybody comment authoritatively on this?
 
I have been studying CGT for the guts of 20 years and have never heard of such an obligation.

Where large losses are made (for example in the dotcom crash) the non-availability of loss relief against future gains would have drastic tax consequences for some people. For example the forfeiture of a €100,000 loss relief would mean an additional tax bill of up to €20,000 on subsequent gains.

As such, were this an actual possibility, it would definitely have been a live issue for tax professionals and indeed for ordinary investors, especially since the dotcom crash. The fact that it has never been mentioned in any authorative source would lead me to conclude that this issue doesn't exist.
 
951 Obligation to make a return

FA88 s10; FA90 s23(3)(b); FA91 s46; FA01 s78; FA02 s52; FA03 s42(1)
(1) [Every chargeable person shall as respects a chargeable period prepare and deliver to the Collector-General on or before the specified return date for the chargeable period a return in the prescribed form of - ]1
(a) in the case of a chargeable person who is chargeable to income tax or capital gains tax for a chargeable period which is a year of assessment-
(i) all such matters and particulars as would be required to be contained in a statement delivered pursuant to a notice given to the chargeable person by the appropriate inspector under section 877, if the period specified in such notice were the year of assessment which is the chargeable period, and
(ii) where the chargeable person is an individual who is chargeable to income tax or capital gains tax for a chargeable period, in addition to those matters and particulars referred to in subparagraph (i), all such matters and particulars as would be required to be contained in a return for the period delivered to the appropriate inspector pursuant to a notice given to the chargeable person by the appropriate inspector under section 879, or
(b) in the case of a chargeable person who is chargeable to corporation tax for a chargeable period which is an accounting period, all such matters and particulars in relation to the chargeable period as would be required to be contained in a return delivered pursuant to a notice given to the chargeable person by the appropriate inspector under section 884,
and such further particulars [(including particulars relating to the preceding year of assessment where the profits or gains of that preceding year are determined in accordance with section 65(3))]2 as may be required by the prescribed form.
 
What about this? Admittedly it says "should" and not "must" and it is only a summary guide....
11. Return of Capital Gains / Losses

Gains or losses arising on the disposal of the assets mentioned in paragraphs 5 to 10 above should be
included in the annual return which you should submit to the Collector-General on or before 31 October
in the year following the year of assessment.
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Post crossed with jfitzer's post.
 
So?

Neither of the above posts mention any consequence (specifically forfeiture of loss relief) for failure to file a return in respect of a capital loss.

Clubman, I don't have time to read the 53-page document which you link. I presume the paragraph you quote is the most relevant part?
 
No. How is that relevant to whether or not I think that the extract quoted from the summary guide to CGT is the most relevant to this thread?
 
No disrespect ClubMan but when dealing with tax affairs you got to be sure, not just 'think' you re sure.
 
I'm not the only one on this thread who is not sure and some of the others are tax experts.
 
Maybe I'm mistaken but you didn't seem too sure here:
ubiquitous said:
As far as I can see...

Even if such a requirement does exist, I honestly can't imagine...

Unless the OP's capital gains or general tax history is somehow unusual or irregular, I wouldn't see this as an issue.
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Yes you are mistaken. You are deliberately and selectively quoting me out of context. I am not, nor do I claim to be, infallible. That is one of the reasons why I used the expressions you quote. (Another is a basic desire not to be seen to be abrupt). However just because I'm not infallible doesn't mean that I'm not certain of my position in relation to the OP's query.

I would have thought that you should at this stage be more concerned with the blatant inaccuracy of the advice you initally gave to the OP (and more particularly the posssible consequences thereof for the OP had your wisdom not been contradicted) than with trying to undermine my own viewpoint as somehow being "unsure".

By the way, challenging Zaire's opinion by asking "Have you read the TCAs and Tax Briefings on this stuff?" is rather ungracious on your part to say the least given your own regular reliance on online guides that Revenue specifically disclaim as having any definite or final authority in the interpretation of tax legislation.
 
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