Adding info re losses brought forward to a CT600

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My question is about the post-2017 corporation tax loss regime and the need to add certain information to the CT600, re losses brought forward being claimed against current year profits.  In particular, the requirement for even very small companies to make a statement about the 'trading profits deductions allowance'.  Without this, there is a risk of the relief being restricted to 50% of the current year's profit.  How do others deal with this?

1)  Does your software cater for it?  (Mine doesn't.)

2)  Are you very clever and add it into your tax comps and tag it yourself?  (This is beyond me.)

3)  Do you attach the statements as a PDF?  (I could do this!)

4)  Do you ignore, or are you unaware of, the whole issue?

For anyone who has adopted (3) or (4), what comeback have you had, if any, from HMRC?

This was never intended to catch companies with profits of less than £5million, but (presumably as a result of poorly drafted legislation) it does.

 

Replies (6)

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By Timothy
14th Jul 2020 14:08

I used to have this as a statement on the computation. Then I switched to Taxfiler and couldn’t, so queried it with them. They said:
“HMRC have said that the computation will act for them as a statement for these purposes.”
And when I queried that:
“The fact that you are claiming losses is statement enough. It looks like this was poor drafting of the legislation and HMRC are sidestepping the issue by giving the loosest interpretation possible so no one fails this.”
Then I got my coat.

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Replying to Timothy:
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By frankfx
14th Jul 2020 14:29

Timothy wrote:

I used to have this as a statement on the computation. Then I switched to Taxfiler and couldn’t, so queried it with them. They said:
“HMRC have said that the computation will act for them as a statement for these purposes.”
And when I queried that:
“The fact that you are claiming losses is statement enough. It looks like this was poor drafting of the legislation and HMRC are sidestepping the issue by giving the loosest interpretation possible so no one fails this.”
Then I got my coat.

in the taxfiler help notes on CT600 losses:

they explain that a letter / pdf is required. seems to contrast with email support were suggesting. Are the help note writers in the same building as email support techie?
ATT also explain that a ''letter'' supporting the claim is required.

''Then I got my coat'' does it have matching belt and braces ?

Poorly drafted CT600, and the tax world is producing guidance at a cost to the economy. and who cares?
We do, because we do not want to fail our clients .

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Replying to frankfx:
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By Timothy
14th Jul 2020 15:29

Got my coat to the extent of ending the email chain with TF. This was back in January so I had other things to do. Admittedly didn’t see that in the guidance at the time. Pdf statements were added, not a pain by any means, just minutely less convenient and one more thing to remember.

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ALISK
By atleastisoundknowledgable...
14th Jul 2020 22:39

TaxCalc includes it. Every now & again the odd client asks why I’ve put that they made a £5m loss!

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By Alf
21st Dec 2021 09:58

I raised this with Taxfiler in Jun 2020. After a long battle where they did not believe me that this was needed, they finally admitted that it was, and advised adding a pdf !!!.

I have just contacted them again, 18m later. Nothing has been done !!! Beggars belief. How hard can it be to add a sentence to a tax comp !!

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Ivor Windybottom
By Ivor Windybottom
04th Feb 2022 11:32

HMRC manuals have a template for the Group Allowance Allocation Statement at:
https://www.gov.uk/hmrc-internal-manuals/company-taxation-manual/ctm04836
(may be difficult to download - try cached version in Google if necessary).

However the HMRC Company Losses Toolkit 2020-21 booklet says:
"The company must specify the amount of the deductions allowance it is entitled to in its tax return. This can be done by including the amount in the tax computations submitted as part of the return. Without this, the company would be subject to the 50% restriction for all profits covered by claims for carried forward losses. "

Whether this comment is sufficient to just show the loss in the CT comp is questionable and my view is that it is safer to simply attach the template as that cannot be questioned. The risk of arguing with HMRC over a 50% restriction to losses is not worth taking, so I will be attaching to the CT600 a full statement in PDF format.

Ideally the software would do this easily, but it doesn't seem implemented yet...

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