Chapter 26 - Corporation Tax Losses

Question 1

When is relief allowed against total profits?

Answer 1

Only if loss making trade is being carried on with a view to make a profit

Question 2

Loss relief on farming companies?

Answer 2

Only if they have not made a loss for the 5 previous years

Question 3

Carried back in the case of cessation?

Answer 3

3 years prior to 12 month loss making period leading to cessation of trade

Question 4

Main causes of non-trading losses

Answer 4

Property business losses - loss incurred on property is set against total profits for accounting period. If can’t relieved it is carried forward and set against succeeding accounting periods as long as property business is being carried on.
May also be relived by group relief.
Restrictions apply on change of ownership

Question 5

Non-trading losses - net debits on loan relationships

Answer 5

Offset against total profits for the accounting period in which the deficit occurs (after deducting trading losses brought forward but before deducting any trading losses relieved against total profits and before charitable donations)
By group relief
By off-set against the company’s income from non-trading loan relationships in the previous 12 months
Carried forward if not relived this way

Question 6

Non-trading on intangible fixed asset losses

Answer 6

May be relived agains the company’s total profits for the loss-making period. Carried forward if not

Question 7

Non-trading capital losses

Answer 7

Relived first against charitable gains of the same accounting period and then against chargeable gains of subsequent account periods. Cannot be relived against any other form of income