Carrying losses back by three years

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The legislation in the Finance Bill at Schedule 6 is already in place as it relates to corporation tax accounting periods ending on or after 24 November 2008. So practitioners may now be ready to make claims to carry losses back under the new rules. This article looks at the carry back for companies, as the rules are significantly different for income tax.

Losses incurred in accounting period ending between 24 November 2008 and 23 November 2010 can be offset against total chargeable profits of the preceding three years under the measure which was originally announced at the November pre Budget report (hence the start date). The original announcement only specified a one year window. It was widely believed that this placed the time frame for losses too early; for example a company with a yea...

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Rebecca Benneyworth
Partner
Rebecca Benneyworth Training Consultants
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13th Jul 2009 15:01

Rate of tax changing mid year
Please could you confirm - if the rate of tax changed during one of the profitable periods against which the loss was offset, the average tax rate is applied to the loss in order to calculate the tax repayment?

Many thanks

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14th Jul 2009 14:54

Yes
As you would time apportion the profit after relief was given to get to Financial years and then apply the correct tax rates, this compound multiplication can be done in any order - so time apportioning the rates of tax gives the same result as apportioning the profits.

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14th Jul 2009 15:50

Many thanks

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By Anonymous
14th Jul 2009 17:34

Can claims be made yet?
Probably a daft question but as the Finance Bill is not yet an Act, can claims be made on CT returns yet (e.g. y/e Nov 2008 losses). My client is chomping at the bit!

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14th Jul 2009 18:07

Yes, get em in
Claims were permitted from Budget Day (22 April 2009) as the Budget resolutions were put to the house that day and that covers us until Royal Assent. So yes, claim away - your only constraint is that the period producing the loss has ended. (Yours obviously has). For those where it hasn't use the Business Payment Support Service to set aside recovery of tax debts until a loss relief claim can be made which will hopefully wipe them out.

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11th Feb 2010 15:46

Corporation tax losses

Under the the corpoation tax losses 3 year carry back, can I claim for a repayment if the accounting period has been extended to 17 months.

The loss for this period is 140,000

Previous year ends were as follows:

31/10/07 - Loss £3331 (c/b to 31/10/06)

31/10/06 - Profit £9542 (excluding loss c/b)

31/10/05 - Profit of £11010

 

Look forward to your comments

Thank you

 

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