CJ writes: Following costs and losses incurred in growing my business and incurring a significant bad debt, the company was forced into liquidation last year. Fortunately, we were able to agree terms with the liquidator to buy some of the trade assets. We used a fresh company to buy the trade and have just completed the first year. The results show a profit and so I am expecting corporation tax will be an issue. 

Given that the old business had tax losses, does the benefit of these losses transfer with the purchase of the business from the liquidator? If so, can we offset them against subsequent profits?

You should be able to utilise the tax losses but there are conditions, writes Jon Sutcliffe, partner at Kingston Smith LLP. First, the losses must have been created from the same trade that has been transferred. To see whether you have losses that could be transferred, you must identify those relating to the trade that has been acquired by the new company. It is important to ensure that the new company does not make any fundamental changes to the nature of the goods and services provided. 

Second, if (as with liquidation cases) only certain assets and liabilities are transferred from the old company, the losses are restricted. The restriction is calculated as: the liabilities kept by the predecessor, less the value of the assets kept by the predecessor, less the sale consideration due by the new company. This usually equates to the amount of debt the old company is not able to pay. 
If you have more than one trade in the new company, then you will not be able to relieve the profits of that trade with the old losses.