A company makes a loss in a period (under CTSA) but, due to a computational error, understates the loss. The error is discovered 2 years later (i.e. past the deadline for amending the return). The company makes profits in later years but insufficient to use the additional losses until more than 6 years later.
FA 1998 Sch 18 para 51 allows a claim for an error or mistake in a return only if the company has paid too much tax and the claim is made within 6 years of the accounting period for which the error was made.
In other words, because the company does not become tax paying until more than 6 years after the period of the original loss, it cannot make an error or mistake claim despite knowing about the error within the 6 year period.
Is this correct?
Graham Buckell
Replies (4)
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Graham, what do you do in the end?
I have just the same problem. HMRC have rejected the error or mistake claim for the year in which the mistake was made but where the profits for that year are covered by losses brought forward. Were you able to make a claim for the first year in which tax became payable whether or not it was within 6 years of the "mistake" year?
Does this help?
http://www.hmrc.gov.uk/manuals/itcmanual/ITCM12030.htm
Seems to suggest that you can make an error or mistake claim if a period is affected by an error or mistake and not necessarily is the subject of the error or mistake.