Farming client made a loss in 2009/10. Losses could not be utilised so were carried forward to 2010/11. No tax due for 09/10.
Profit made in 2010/11 and averaged with 2009/10, resulting in a tax liability for 09/10 but no tax for 10/11 due to losses brought forward. However if we could carry back the losses which had been brought forward we could eliminate the 09/10 tax and still have enough losses left over in 10/11 for there to be no tax due.
The averaging claim does not save any tax as there is no tax for either year whether we average or not, but by averaging we give ourselves a lower profit figure should we need to average again in 2011/12.
The question is, are we allowed to carry back losses which had been brought forward purely by claiming on the 2010/11 Tax Return or would we need to amend and re-submit the 2009/10 Tax Return too?