Chapter 16 - Losses for companies

Question 1

How do you calculate adjusted trading loss?

Answer 1

Tax adjusted trading Profit/Loss

Less: Capital Allowances

Question 2

What will a companies trading loss be on the TTP

Answer 2

Nil

Question 3

What are the four Reliefs for trading losses?

Answer 3

• Carry forward relief
• Current year relief
• Current and prior year relief
• Terminal loss

Question 4

For Carry forward relief

Is a partial claim allowed?

Answer 4

Yes

Question 5

For Current year relief

Is a partial claim allowed?

Answer 5

No

Question 6

For Current and prior year relief

Is a partial claim allowed?

Answer 6

No

Question 7

For Terminal loss relief

Is a partial claim allowed?

Answer 7

No

Question 8

What period is carry forward relief used against?

Answer 8

Carried forward

Question 9

What period is current year relief used against?

Answer 9

Current period

Question 10

What period is current and prior year relief used against?

Answer 10

Current period, then carry back 12 months.

Question 11

What period is terminal loss relief used against?

Answer 11

Carr back 36 months

Question 12

On what basis is Terminal loss relief?

Answer 12

LIFO basis

Question 13

When would you use terminal loss relief?

Answer 13

When a company ceases to trade.

Question 14

List the headings of the trading losses proforma

Answer 14

Tax adjusted trading profit X

Interest income (GROSS) x
Property income x
Chargeable gains x

Total profits X
Less: Loss relief (x)

Less Qualifying charitable donation (x)

Taxable profits X or Nil

Question 15

What are three factors that influence choice of loss relief?

Answer 15

• Tax saving
• Cash flow
• Wastage of relief for Qualifying charitable donation payments