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Can you carry back losses which were brought forward?

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?


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13th Sep 2011 16:42

You say that in 2009/10 you had a loss and carried that loss forward to 2010/11.  

By averaging the profit in 2010/11 with the loss in 2009/10 you now have a profit in 2009/10 and a profit in 2010/11 (which you say you can reduce to nil with carried forward losses).

Surely those losses would not be available as you state that you now have a profit in 2009/10. 

You seem to be keeping the 2009/10 losses carried forward, averaging the two years together (thereby wiping out the loss from 2009/10) and then wanting to carry back this same loss which wouldn't exist anymore if you average.

Regarding the administration of averaging, you make the adjustment on the 2010/11 tax return in the "adjustments for averaging" box.

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If you are in time to make an averaging claim you are still in time to amend the original loss claim/

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By mwngiol
14th Sep 2011 09:38


Where I was getting confused was in the fact that we do not amend the 2009/10 TR.

2009/10 had a loss of £30k which was carried forward. 2010/11 has a profit of £26k.

An averaging claim in 2010/11 results in a £13k profit in 09/10 and in 10/11 but because we don't amend the 09/10 TR there is still a loss b/f into 10/11 of £30k.

I've dealt with averaging claims many many times so I understand how to deal with it on the TR, but this is the first time for me to carry back a loss as well as averaging.

The only way I could think of doing this was to submit the 10/11 TR showing a loss b/f of £17k rather than £30k but I wasn't sure if this would trigger something at HMRC seeing as the original 09/10 TR showed a loss c/f of £30k. I have now submitted the 10/11 TR on this basis with an explanation in the white space just in case.

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