Can a sole trader carry back losses to reclaim some tax paid from previous years?
A sole trader who bought a large quantity of stock 2012-13 sold a fair amount and made a good profit. However last year he was unable to sell more - faulty goods - took time to sort out. This means his will have virtually no turnover and a reason loss. This will continue into 2014-2015. He wants to know can he carry the loss back to recoup some tax paid?
I don't believe I ever came across this, just normally 'carry forward' to reduce current year. For a quick answer I thought I post here.
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Loss relief against current or previous year
Under s.64 ITA 2007, you can claim loss relief against total income of the current and/or previous year. So, he can carry back any loss in 2013/14 against his profits in 2012/13, but not a loss in 2014/15, which he will only be able to carry forward against the first future profits of the same trade under s.83.
you may also wish to consider
Revising the first years accounts stock figure if in time, what's the year end
Losses - HS227 guidance
https://www.gov.uk/government/publications/losses-hs227-self-assessment-...