Chapter 10 - Relief for Trading Losses

Question 1

Relief for Trading Losses

Answer 1

Options:

1) set against total profits in current AP
2) carry back and set against total profits in preceding 12 months
3) carry forward a loss made before 1/4/17 and set against next available future trading profits from the SAME trade
4) carry forward a loss made after 1/4/17 and set against total profits of a later AP

Question 2

Current Year Releif

Answer 2

The loss is set against total profits before deducting QCD of the current AP. Claim is for the lower of available loss or the available profit

Question 3

Carry Back Losses

Answer 3

Claim to carry back a loss under s.37b may only be made once a current year claim has been made.
If there are no profits in the current period, it is not possible to make a s37a claim but doesn’t prevent a s.37b claim being made.
Loss carried back is set against total profits arising in the previous 12 months before QCDs

Question 4

Carry Back Complications

Answer 4

Losses are carried back for a full 12 month period. Where prior AP is less than 12 months, you can carry back to the period before by time apportioning for the remaining months

Question 5

Losses Carried Forward - Before 1 April 17

Answer 5

Losses incurred before 1 April 17 are set against the first available future trading profits under the same trade. No claim is required, it applies automatically. A claim can however be used for some or all of the loss not to be offset against the subsequent AP. Claim must be made within two years of the end of the later AP

Question 6

Note

Answer 6

Losses incurred after 1 April 2017 may be set only against the first available profits of the same trade if the trade became small or negligible during the period in which the loss was made.

Question 7

Losses Carried Forward - After 1 April 17

Answer 7

Losses incurred in an AP beginning 1 April 17 onwards, the company may make a claim for some or all of the unrelieved trading loss b/f to be set against totalprofits of the next AP. Must be made within two years of the end of the subsequent AP

Question 8

Note

Answer 8

The rules for the use of losses incurred in APs straddling 1 April 2017 are excluded from the paper

Question 9

Terminal Loss Relief

Answer 9

When a company ceases to trade, the trading loss of the final 12 months of trade can b carried back against total profits of the previous 3 years ending before the start of the loss making period