PowerSwitch

http://www.ft.com/cms/s/0/369b723e-6a52 ... ck_check=1

After the latest sale, Merrill has a UK operating loss of about $29bn that it can carry forward indefinitely for tax purposes. At the current corporation tax rate of 28 per cent, that means the bank will be able to offset losses against future profits, lowering its UK tax bill by as much as $8bn. Merrill declined to comment.

How is it possible to offset losses made in one year against future profits? Can any company do this? Can a self employed person do this, or is it something just the banks can do?

If Merrill’s UK subsidiary were to continue to generate profits at 2006 levels, a record year for the investment banking business, it would pay no UK corporation tax for 60 years.

Bastards!!!

Any company or charity can do it. I'm not sure about self-employed people.

Paul Wolfowitz stated that he believed the world could be made in America's image as "that was what people everywhere really wanted anyway".

Well, there you go.

emordnilap wrote:But organically-grown food is conventional - me

[pedantic]
Not quite - organic practices utilise knowledge that wasn't known 50 (or so) years ago.
[/pedantic]

The general principle behind loss carry forward is that if you take a loss making year and a profit making year together you haven't really made any money - you've just got back to where you started before the loss. So far so relatively uncontroversial. It's the size of the losses that make this disproportionate - but they did really lose it.

We do have rules which ensure that the losses from one trade can't be used to stop you paying tax on profts from a completely different business but the losses can still be used as long as this rule is complied with.

However a lot of countries have rules which time bar the carry forward of losses. I can see that coming as the government will need to raise as much money as it can

My glorious former employer exploiting the British taxpayer

If you think about it, it's very clever.

Make huge losses, get US tax payers to foot the bill.

Book loss in another country and never pay tax again.

Fingers crossed they'll go pop at some point anyway.