(1). It is not possible for a company’s capital losses to be transferred when its business is sold. The capital losses will remain with DTU Ltd and can be offset against any gains arising on the sale of its assets or on future disposals.
(2). Trading losses can be offset against future profits of the same trade. This means that the losses carried forward as at 31 March 2014 can be offset against the trading profits of the year ended 31 March 2015 provided the changes made to the activities of GZI Ltd do not amount to the carrying on of a different trade. From the facts given it is more likely that GZI Ltd is carrying on the same trade but has changed the manner in which it is carrying it on.
The changes made by GZI Ltd to its activities would amount to a major change to the nature or conduct of its trade. However, the rules that restrict the offset of trading losses in these circumstances only apply when there has been a change of ownership of a company, which is not the case here.
(3). The trading losses will be automatically transferred to KPB Ltd together with the trade of EDA Ltd. This is because LGB Ltd is the beneficial owner of at least 75% of the business of EDA Ltd prior to the sale of the business to KPB Ltd (because it owns 100% of EDA Ltd) and will continue to control at least 75% of the business once it is directly owned by KPB Ltd (because it owns 80% of KPB Ltd).