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R&D Enhancement for SME - Trading Loss incurred

R&D claim which has resulted in a repayment of CT

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R&D Enhancement for SME

A client has submitted an R&D claim (via 1 third party) which has resulted in a repayment of Corporation Tax for the previous 2 financial years and a loss of trade to carry forward into this current year.

Would the loss b/f affect any interim dividends already declared and paid in this year?  

 

Replies (5)

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By Wanderer
08th Apr 2022 08:34

Why should it?
If anything retained earnings are likely to be increased by the R&D claim.

Thanks (2)
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By Bobbo
08th Apr 2022 08:58

As with Wanderer, an R&D claim should surely only increase retained earnings - so if the dividends were fine before they definitely are now.

However, unclear what you mean by "loss of trade" ?

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Replying to Bobbo:
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By Maizie
08th Apr 2022 11:35

The R&D enhancement 130% has created a loss b/f in this current year which will
negate any CT which would have otherwise been payable. "Loss of trade" maybe not the correct terminology.

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Replying to Maizie:
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By Paul Crowley
08th Apr 2022 12:33

Tax losses and losses per the accounts will not be the same

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Replying to Maizie:
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By Bobbo
08th Apr 2022 12:51

I see. So as well as a repayment of corporation tax paid in a previous period, the client now has brought forward trading losses use against profits of this current year.

So the tax charge in the current year's accounts will be lower than it otherwise would have been. Again, this would appear to only increase retained earnings and so would not [negatively] affect any dividends paid in this year.

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