Corporation Tax relief may be available when a company or organisation incurs a trading loss, a loss on the sale or disposal of a capital asset, or property income. The loss may reduce Corporation Tax by offsetting it against other profits or gains from the same accounting period.
Can I carry a trading loss back?
Additionally, companies can carry a trading loss back to previous years to claim relief by offsetting it against earlier profits, which could generate a Corporation Tax refund. You can claim for the loss to be offset against profits for the earlier 12-month period. You can only do this if your company was carrying on the same trade at some point in the accounting period that falls in the earlier 12-month period. You can make a claim to carry back a trading loss when you submit your Company Tax Return for the period when you made the loss. If you're going to make a claim in your Corporation tax return that reduces your corporation tax liability for an earlier period, you need to ensure that you have correctly filled in your CT 600 form to do this. Claims should be made within 2 years of the end of the accounting period. Any loss that is not utilised in the current year or carried back to the prior year will automatically be carried forward against profits from the same source.
How do I carry a loss back?
A claim to carry back a trading loss will usually be included when you complete the Corporation Tax Return for the period of the loss. The claim can also be made as an amendment to the return, subject to being within the time limit to amend (ordinarily within 2 years of the end of the accounting period). Losses can only be carried back to the preceding accounting period if the company was trading in that period.
If you are offsetting a loss against a period where you have already paid the tax due, HMRC will issue a repayment. Where a claim for repayment is being made an “X” needs to be entered in the relevant box in the return.
Contact Us
Claiming corporation tax relief for your business may seem like a daunting task. Our corporation tax specialists can help you claim losses on your tax return. For more information our tax team can help, please contact us today.