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



## paul_m (1 Nov 2006)

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

Example:-
=======
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?


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## Zaire (8 Nov 2006)

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.


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## ClubMan (8 Nov 2006)

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.


Are you sure about that? Can you quote something authoritative on this?


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## Zaire (9 Nov 2006)

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.


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## ClubMan (9 Nov 2006)

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.


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.


 Have you read the _TCAs _and _Tax Briefings _on this stuff?


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## jfitzer (9 Nov 2006)

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


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## ubiquitous (9 Nov 2006)

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.


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## ClubMan (9 Nov 2006)

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?


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## ubiquitous (9 Nov 2006)

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.


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## jfitzer (9 Nov 2006)

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.


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## ClubMan (9 Nov 2006)

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.


 _Post crossed with jfitzer's post._


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## ubiquitous (9 Nov 2006)

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?


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## ClubMan (9 Nov 2006)

ubiquitous said:


> 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?


I think so.


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## Miles (9 Nov 2006)

ClubMan said:


> I think so.


 
Are you a tax expert?


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## ClubMan (9 Nov 2006)

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?


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## Miles (9 Nov 2006)

No disrespect ClubMan but when dealing with tax affairs you got to be sure, not just 'think' you re sure.


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## ClubMan (9 Nov 2006)

I'm not the only one on this thread who is not sure and some of the others *are *tax experts.


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## ubiquitous (9 Nov 2006)

ClubMan said:


> I'm not the only one on this thread who is not sure and some of the others *are *tax experts.



Are you implying that I am unsure on this? If so you're wrong...


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## ClubMan (9 Nov 2006)

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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## ubiquitous (9 Nov 2006)

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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## bazermc (9 Nov 2006)

Pretty simple really section 951 TCA 1997 refers
Losses incurred *must be* returned/filed, hence the box 809 appearing on the 2005 Form 11.

If you had lossses, that you did not declare, you would be deemed to have filed an incorrect return. This does not mean that the losses are unavailable for offset against a future gain. There is no legislation or case law precedent that provides for this restriction. Instead you can simply declare losses in prior year in box 810. 

Of course revenue can go after you for making an incorrect return, but in all honestly I think they have better things to be doing with there time. i.e. a letter of repair to a form 11/12

Lastly, there is nothing stopping you from making a subsequent declaration of capital losses after the return has been filed.

Regarding loss restrictions the only restrcition in place refers to corportaion tax. This serves to restriction the amount of losses available for use where a return is late


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## bazermc (9 Nov 2006)

paul_m said:


> In my case I did alot of share dealing in 2002,2003 & 2004, but I never did tax returns on the transactions.


 
Of course there is a possibility that this could in fact be considered a "trade" and not capital acquisitions and diposals, in which case you have a further problem

Did your accountant mention this at all?


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## Zaire (9 Nov 2006)

ClubMan said:


> 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.
> Have you read the _TCAs _and _Tax Briefings _on this stuff?


 
Yes Clubman, as a tax consultant I express an opinion on interpretation of tax law (esp.when it is not black and white as in this instance) so this is 'just' my opinion which hasn't changed since 11:30 this morning! 

If you had read the TCA and Tax Briefings you would not suspect I was wrong. As you readily agree you are not a tax expert so why shout down those of us helping someone (who had got questionable advice) when we offer an opinion for free?


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## ClubMan (9 Nov 2006)

Are you saying that basermc is wrong so?


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## ClubMan (9 Nov 2006)

ubiquitous said:


> By the way, challenging Zaire's opinion by asking "Have you read the TCAs and Tax Briefings on this stuff?" is rather ungracious


That was a straight question. If you read it as an ungracious challenge then that's not my problem.


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## ubiquitous (9 Nov 2006)

As I said earlier



> 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


... rather than trying to pick rows with everyone else here.


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## Zaire (9 Nov 2006)

I don't agree with basermc's interpretation of S951. The relevant part of S951 is per jfitzer's post - nothing stating that losses incurred must be returned/filed. S951 tals about "a chargeable person who is chargeable to income tax or capital gains tax for a chargeable period".

So the question to be asked is 'Was Paul_m a shargeable person chargeable to capital gains tax..."  in the years he made capital losses? I think not.

However basermc agrees that there is no restriction on taking the capital losses forward (with myself and ubiquitous) and his point on trade is of course valid.


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## Stockmaster (25 Oct 2012)

What was the end of this. I find myself in Paul_M boat having not declared capital losses going back over 8 years. Is there a limit on how far can now declare them. can I just fill out the section in the F11 form "Amount of unused loss(es) from prior year(s) available for offset against chargeable
gain(s) above"


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## mandelbrot (25 Oct 2012)

Stockmaster said:


> What was the end of this. I find myself in Paul_M boat having not declared capital losses going back over 8 years. Is there a limit on how far can now declare them. can I just fill out the section in the F11 form "Amount of unused loss(es) from prior year(s) available for offset against chargeable
> gain(s) above"


 
There is no restriction of the carry forward, just complete the box with the total of your losses carried forward.


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## dereko1969 (25 Oct 2012)

That doesn't seem to make sense in a world where Revenue restrict claims to 4 years that they would allow unlimited carry forward of losses.

Not that I know anything about the area but it just seems strange, do you have a source for that view?


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## mandelbrot (25 Oct 2012)

dereko1969 said:


> That doesn't seem to make sense in a world where Revenue restrict claims to 4 years that they would allow unlimited carry forward of losses.
> 
> Not that I know anything about the area but it just seems strange, do you have a source for that view?


 
The 4 year limit is contained within S.865 TCA 1997, "Limit of time for repayment claims". What we are talking about here is the carry forward of a loss, not a claim for repayment. The relevant section for allowability of CGT losses is S.546, the Revenue instruction manual relating to this section is here (http://www.revenue.ie/en/about/foi/s16/income-tax-capital-gains-tax-corporation-tax/part-19/19-02-05.pdf?download=true), and you'll see that losses carried forward are treated as a deduction in calculating the amount of chargeable gains in a period. A deduction is very different to a repayment.

[broken link removed]


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## dereko1969 (25 Oct 2012)

Thanks for clarifying that, it still seems illogical to have an open-ended deduction on gains. I know it's not a repayment but it does reduce liability.

Now for a stupid question. 

What happens where someone has been made bankrupt, can previous losses that presumably should have been wiped out by the declaration of bankruptcy be used?


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## mandelbrot (25 Oct 2012)

dereko1969 said:


> Thanks for clarifying that, it still seems illogical to have an open-ended deduction on gains. I know it's not a repayment but it does reduce liability.
> 
> Now for a stupid question.
> 
> What happens where someone has been made bankrupt, can previous losses that presumably should have been wiped out by the declaration of bankruptcy be used?


 
I suppose the open-endedness arises out of a need for equitable treatment. Capital transactions are of their nature infrequent (as opposed to income/revenue related transactions), indeed many people may never realise a capital gain / loss other than the exempt kind on their PPR.

It would arguably be unfair to penalise someone by not allowing the carry forward of a loss just because they haven't sold any chargeable assets within a specific period of time. 

This is in contrast with the time limit for repayments, which exists in order to ensure people file their returns / claim their entitlements within a reasonable period of time, and allows for manageable administration of the tax system. (Without a time limit you could waltz into the tax office and say you're due back £5 and 4 shillings from 1968!).

So the 4-year time limit applies where for some reason a taxpayer hasn't actually done something they're obliged to do - file a complete and accurate return or claim a repayment they are entitled to. On the other hand, there is no (nor should there be any) obligation to sell an asset / realise a capital gain in order to be allowed the benefit of a loss previously incurred.

As for your question about bankruptcy, I don't know off the top of my head!


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## postman pat (6 May 2013)

by the way in a related question... if you make a capital loss on a  property can you add the costs involved in buying the property fees etc in that loss?
for instance  if you paid 100k for a property and the charges were say 5k and the property was sold for 80k  would the loss be 20 plus 5...25k loss

 Pat


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## Brendan Burgess (7 May 2013)

Yes


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## postman pat (7 May 2013)

thanks


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## amgd28 (6 Aug 2013)

Do the "transaction costs" include any stamp duty paid on the original transaction when setting the base cost for CGT?


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## mandelbrot (7 Aug 2013)

amgd28 said:


> Do the "transaction costs" include any stamp duty paid on the original transaction when setting the base cost for CGT?


 
Yes
http://www.revenue.ie/en/tax/cgt/leaflets/cgt2.html


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