CH14 - Losses for Companies Flashcards
Carry forward relief
Partial claim allowed
Can be rolled forward indefinitely.
No need to make current year claim.
Claim must be made within two years of which the loss is relieved.
Current year relief
Whole loss – no partial claim allowed
Within two years of the end of the loss-making accounting period
Current and prior
Prior 12 months in full
Can carry back further prior period less then 12 months
LIFO basis
Has to be made current year first
Within two years
Anything left can be carried forward and PARTIAL CLAIM
Terminal loss
LIFO basis
Must set against current year first
Goes just in 36 months – don’t care about the split of years
Balance is lost after the 3 years carry back
Choice of relief
Depends on what the TTP/Aug profiut will be. If TTP above $50k, claim max relief in that year to keep under $50k and avoid marginal or higher rate of corp tax!
If prior year is less than 12 months
Calculate remaining loss available vs profit apportioned as a fraction e.g 4 months.
Able to claim lower of
TTP vs Aug Profit
TTP PLUS Dividends = Augmented Profit. If this is above $50k, Claim relief here
Calculation of trading loss
Tax adjusted trading profit minus capital allowances:
Adjusted trading loss
Property business loss
Has to be full current year, then b/f on a partial claim, can be unrelieved b/f
Offset against total profit
Can never be carried back
Automatically done
Occurs before normal trading losses
Capital Losses
Set against chargeable gains in the same period, then relief b/f
Relief is automatic no claim required
Relief is in full - never partial in current year
Never can be carried back against earlier periods
Use of capital allowances for calculating TTP
Capital Allowances will be used to calculate Trading loss:
Trading loss
minus capital allowances
Trading loss
Profit on disposal of shares in question
This is just going to be used to give you the chargeable gain, don’t use any other numbers.
