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Can "missed" CT deductions apply to following year

Can I bring forward "unclaimed" CT deductions into the following year?

Didn't find your answer?

I apologise in advance for any misuse of the correct terminology but I'm an engineer not an accountant!

I want to know if I can apply Corporation tax deductions that should have been made in 2018-19 (but weren't) to this years accounts?

So, some context. In the 2018-19 accounting period I wasn't well and as a result my limited company had no sales income. My accountant said that as a result we would submit "nil accounts". Which is what happened. However during that time the company continued to pay the director's pension, some professional subscriptions and some other things which ordinarily would be tax deductable. When I queried with the accountant what would happen about these outgoings he said we would address these in this accouting period. Presumaby because in 2018-19 there was no profit against which deductions could be made.

This year the company is effectively back to normal i.e. has sales income. I'm looking at putting the accounts together but I'm not sure how these "missing" outgoings can be addressed in this year. Has the opportunity simply been missed? Or do I simply record all the outgoings from last year in this accounting period and can then claim the tax deduction in the usual manner?  

Advance thanks for any help.

Replies (37)

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Lone Wolf
By Lone_Wolf
27th Feb 2020 13:53

srhowl wrote:
... I'm an engineer not an accountant!

My accountant said...

Would it not be quicker and easier for you to ask your accountant? I don't envisage you getting a great reception trying to leech free advice on here.

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Hallerud at Easter
By DJKL
27th Feb 2020 13:54

Well I can dance with your query
If you think you're needy
Does your accountant know that you're out?
And I can chat with you baby
Flirt a little maybe
Does your accountant know that you're out?

Take it easy (take it easy)
Better slow down there
That's no way to go
Does your accountant know?
Take it easy (take it easy)
Try to cool it there
Take it nice and slow
Does your accountant know?

In effect- ask your ..........................

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Replying to DJKL:
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By The Dullard
27th Feb 2020 13:55

Are you seriously suggesting that the OP should ask the dead accountant?

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Replying to The Dullard:
Hallerud at Easter
By DJKL
27th Feb 2020 13:58

No spoilers- have you already read this one?

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By The Dullard
27th Feb 2020 13:54

Do you own a gun?

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RLI
By lionofludesch
27th Feb 2020 14:39

Jeez - you urgently need a proper accountant.

What was filed at Companies House ?

Nothing ? Dormant accounts ?

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Replying to lionofludesch:
Caroline
By accountantccole
27th Feb 2020 15:09

Scary isn't it?

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Replying to lionofludesch:
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By Accountant A
27th Feb 2020 15:14

lionofludesch wrote:

What was filed at Companies House ?

He said. It was "nil accounts". You know those accounts you submit when you can't be @rsed to do the job properly. Those ones.

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RLI
By lionofludesch
27th Feb 2020 15:32

OK - well, srhowl, it might have seemed a great cost-saving wheeze to submit some "nil accounts" when you didn't have any other income but the other side of the coin is that, had you submitted proper accounts, you could have claimed a loss.

That might not have been much use at the time but it would've effectively been money in the bank to use against the company's Corporation Tax bill.

You don't give enough information to say whether the tax on losses you wasted would be more than the fees you saved. Could be you're still ahead.

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By srhowl
27th Feb 2020 19:38

My mistake. I thought I would get some advice on here but apparently it's the wrong crowd.

"Would it not be quicker and easier to ask your accountant?"

Yes it would have been had the working relationship not broken down over exactly the kind of issues as the one I am describing. Which is why I am trying to understand what has been done and what needs doing.

"those accounts you submit when you can't be @rsed to do the job properly."

I didn't file the accounts the accountant did and yes I completely agree, that was my reaction at the time and why I lost confidence in the advice I was being given.

"it might have seemed a great cost-saving wheeze to submit some nil accounts".

As I say above, I didn't file the accounts I followed the advice of my accountant who prepared and filed the accounts for me; after all that was what I was paying him for. And no it didn't save me any money cause he was billing me the same whether they were nil accounts or not. So no, I don't think I'm ahead I think I've been screwed by some duff advice.

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Replying to srhowl:
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By Matrix
27th Feb 2020 20:02

Yes it looks like you have been unlucky and the accountant was lazy and unprofessional, you could have reclaimed tax paid in prior years, assuming the company was active then.

Ask around for a recommendation for a local accountant who you can trust and I am sure they will sort it all out.

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Replying to srhowl:
RLI
By lionofludesch
27th Feb 2020 22:50

Quote:

I think I've been screwed by some duff advice.

Probably right. However, just because you don't like the advice or its delivery, that doesn't mean it's not good advice.

I'm surprised no one has mentioned it so far but this is supposed to be a discussion forum for accountants, not a free advice forum for business owners, although I'm increasingly finding it difficult to believe it myself.

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Replying to lionofludesch:
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By srhowl
27th Feb 2020 23:46

"this is supposed to be a discussion forum for accountants"

Whilst yes I am a company director I have also been taking accountancy classes so I thought I'd be welcome to ask questions here but seems I was wrong about that too.

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Replying to srhowl:
RLI
By lionofludesch
28th Feb 2020 06:40

srhowl wrote:

"this is supposed to be a discussion forum for accountants"

Whilst yes I am a company director I have also been taking accountancy classes so I thought I'd be welcome to ask questions here but seems I was wrong about that too.

I give up.

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Replying to srhowl:
Hallerud at Easter
By DJKL
27th Feb 2020 23:05

"I didn't file the accounts the accountant did"

Who signs the accounts- at the end of the day the directors are legally responsible for the submitted accounts ,not the accountant they have appointed. They may have an action against him/her (usually not worth pursuing) but they sign the accounts and authorise their submission.

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Replying to DJKL:
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By atleastisoundknowledgable...
28th Feb 2020 08:56

DJKL wrote:

"I didn't file the accounts the accountant did"

Who signs the accounts- at the end of the day the directors are legally responsible for the submitted accounts ,not the accountant they have appointed. They may have an action against him/her (usually not worth pursuing) but they sign the accounts and authorise their submission.

TBF, the client was following the accountant’s ‘advice’. It’s not their fault that the accountant was being lazy. We’ve filed many accounts with £nil income and carried a tax loss back to get a refund for the client.

OP - the accountant has let you down here, although over time there wasn’t necessarily a cash loss, maybe just a cash flow advantage that hasn’t been gained. To answer your question, yes put last year’s expenses in this year’s accounts (but this is something that your new accountant will advise you on).

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Replying to atleastisoundknowledgable...:
Hallerud at Easter
By DJKL
28th Feb 2020 12:05

Hold it, I accept a client not being able to check all transactions treated correctly, but signing accounts with no transactions when client knows there were transactions, that is not a lack of technical accounting knowledge but more a lack of common sense.

Not convinced re just put costs in the next year- does that work with pension contributions?

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Replying to atleastisoundknowledgable...:
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By Bobbo
28th Feb 2020 14:16

atleastisoundknowledgable... wrote:

DJKL wrote:
To answer your question, yes put last year’s expenses in this year’s accounts (but this is something that your new accountant will advise you on).

Perhaps also consider if last year's accounts are materially misstated and this year's should show include restated comparatives.

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Replying to srhowl:
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By Accountant A
28th Feb 2020 15:33

srhowl wrote:

My mistake. I thought I would get some advice on here but apparently it's the wrong crowd.

If you set up a company and are appointed as a company director you should take the time and trouble (in advance) to educate yourself on the legal obligations that come with that.

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By jonopus
28th Feb 2020 12:40

As far as I am concerned you are entitled to claim CT expenses missed up to six years ago under The Statute of Limitations!

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Replying to jonopus:
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By Tax Dragon
28th Feb 2020 13:33

You don't claim expenses. You claim tax relief for expenses. Tax relief would be due in the year in which the expenses were incurred. You might be right that The Statute of Limitations! imposes a six year time limit for being able to claim tax refunds for earlier years. There may be other, more pressing, restrictions in the Taxes Acts.

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By jonopus
28th Feb 2020 12:40

As far as I am concerned you are entitled to claim CT expenses missed up to six years ago under The Statute of Limitations!

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Replying to jonopus:
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By Tax Dragon
28th Feb 2020 13:38

Isn't life great when you can make up your own rules? You'll need your passport though, to leave Pimlico.

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Replying to Tax Dragon:
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By jonopus
28th Feb 2020 15:37

Quite surprised that a person with your tax knowledge would not understand the Statute of Limitations but there you go....

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Replying to jonopus:
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By Tax Dragon
28th Feb 2020 15:42

I expected you to say:

jonopus wrote:

Quite surprised that a person with your tax knowledge would not understand sarcasm.

But there you go.

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Replying to jonopus:
Hallerud at Easter
By DJKL
28th Feb 2020 15:05

"Key points
Tax relief on employer contributions is given by allowing pension contributions to be deducted as a legitimate business expense.
Deductions are only allowed in the chargeable period in which the contributions are paid."

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/tax-...

"Employers’ contributions to registered pension schemes are allowed as a deduction for the period of account in which they are paid by the employer, and for no other period, unless either the deduction is required to be spread over a number of periods or the deduction is allowed for an earlier period, as described below. "

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim46010

No expert on these but maybe the 2004 Act helps at section 196 (2)(b)

"196Relief for employers in respect of contributions paid
(1)This section makes provision about an employer’s entitlement to relief in respect of contributions paid by the employer under a registered pension scheme in respect of any individual.
(2)For the purposes of [F1Part 2 of ITTOIA 2005] [F2or Part 3 of CTA 2009 (trading income)] —
(a)the contributions are to be treated as not being payments of a capital nature to the extent that they otherwise would be, and
(b)if they are allowed to be deducted in computing the amount of the profits of the employer, they are deductible in computing the amount of the profits for the period of account in which they are paid.

http://www.legislation.gov.uk/ukpga/2004/12/section/196

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Replying to DJKL:
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By jonopus
28th Feb 2020 15:36

I wasn't referring to pension contributions which are allowable based on the movement of cash but a situation where say an old 3 year old invoice turns up relating to a business expense which is tax allowable and is then entered on the books and records. Are you saying that the Client is unable to claim this against CT?

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Replying to jonopus:
Hallerud at Easter
By DJKL
28th Feb 2020 16:06

No, but the OP starts his list of omissions with Pension Contributions and my earlier post (earlier than your first post) querying deductibility expressly referred to Pension Contributions as a possible issue.

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Replying to jonopus:
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By SXGuy
28th Feb 2020 15:06

What world do you live in? I think someone has spent to much time revising consumer law.

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Replying to SXGuy:
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By jonopus
28th Feb 2020 15:33

Tax and accounting actually:-) Would you write off a disputed liability in a Client's Balance Sheet before it was 6 years old?

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Replying to jonopus:
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By Tax Dragon
28th Feb 2020 15:44

jonopus wrote:

Tax and accounting actually:-) Would you write off a disputed liability in a Client's Balance Sheet before it was 6 years old?

I repeat, you don't claim an expense. You claim tax relief for an expense. There are time limits (outwith The Statute of Limitations) for making claims to tax reliefs.

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Replying to Tax Dragon:
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By jonopus
28th Feb 2020 15:53

No-One is disputing that! My argument is that you have to recognise a new liability for at least 6 years while you could claim the tax relief if it was less than 3 years old so there would be no problem in this case ?

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Replying to jonopus:
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By Tax Dragon
28th Feb 2020 15:59

What's the new liability? In the present case, everything was paid.

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Replying to Tax Dragon:
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By jonopus
28th Feb 2020 16:08

Apologies as I hadn't read that through (my bad). However, if I were him I would be looking to see what other allowable expenses have been missed by the negligence of his Former Accountant (maybe those paid personally and claimable through the Business?

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Replying to jonopus:
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By Tax Dragon
28th Feb 2020 16:37

No the bad is all mine.

I should have realised you were addressing a wholly different question from the one asked.

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Replying to Tax Dragon:
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By jonopus
28th Feb 2020 19:47

Slightly harse as the question was in relation to possible deductions missed in prior years?

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panda ketteringUK
By ketteringUK
29th Feb 2020 14:33

This might be the company in question

https://beta.companieshouse.gov.uk/company/06173716/filing-history

No accountants name on the front page since 2017.

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