Corp Tax CH 14 - Relief for Trading Losses Flashcards
What company can do with losses (state leg. ref.)
- Carry the loss forward (CTA 2010, s.45A(6))
- offset against total profits of the same accounting period (CTA 2010, s.37(3)(a))
- Carry back against total profits of the previous 12 months (CTA 2010, s.37(3)(b))
Total profits means income and gains before deducting qualifying charitable donations.
What loss claims got restricted partial claims under CTA2010?
(which claims are ‘all or nothing’)
Both are ‘all or nothing’:
* carried back (CTA 2010, s.37(3) (b))
* current year (CTA2010,s37(3) (a))
What is the time limit for
* carried back (CTA 2010, s.37(3) (b))
* current year (CTA2010,s37(3) (a))
2 years from end of the loss-making accounting period
What restriction applies to
(CTA 2010, s.45A(6))
condition & possible disclosures
The max b/fwd losses that can be reliefed is lower of;
- c/fwd unrelieved losses, &
- the deductions allowance (£5m) + 50% × (unrelieved profits – deductions allowance).
A company must specify the amount of its deductions allowance in its corporation tax return;
&
must also specify the allocation of the deductions allowance between different types of profits (if the loss carried forward can only be used against certain kinds of profits)
£5 million for a single company for a 12-month accounting period (reduced for short accounting periods).
Unrelieved profits = total profits after current year loss relief.
What a company do to claim (CTA 2010, s.45A(6))?
one condition
The company must continue to trade in the accounting period in which the relief is to be given
How Terminal loss Relief can be claimed?
the trading loss of the final 12 months of trade can be carried back
against total profits of the 36 months ending immediately before the loss- making period rather than the normal 12 months.
What is considered a terminal loss relief, if the penultimate accounting period of trade is also loss making
for final acc. period of trade with less than 12mts long
Then a proportion of this loss is also a terminal loss and can be carried back against the total profits of the 36 months ending immediately before this loss-making period.
