Carrying back trading losses
A company incurring a trading loss in an accounting period can make a claim to offset the loss against total profits of the previous 12 months after first having set the losses against any profits of the accounting period in which the loss occurred.
The Budget 2021 and Finance Bill has introduced a new extended loss carry back for businesses subject to income and corporation tax, giving the opportunity to make the most of any trading losses related to the pandemic.
Trade loss carry back is extended from the current 1 year entitlement to a period of 3 years, with losses being carried back against later years first. This extension will apply to trading losses made by companies in accounting periods ending between 1 April 2020 and 31 March 2022.
How to claim loss relief on a CT600
HMRC claims that as long as box 45 for 'Claim or relief affecting an earlier period' is ticked on the current year return, you should not need to re-file the amendment for the earlier year. This being said, customers have previously reported that although this box is ticked, the repayment has not been issued and therefore an amendment of the earlier year was required to issue this repayment. How you make the claim will depend on how far back you wish to carry back the loss. For more information on timescales of filing amendments, please see the article for What tax years can I file online?
Entries to make for the current return period in which the losses have arisen (V3 form 2020)
HMRC Forms Mode:
2. Go to CT600 Core > Computations > Losses, Management Expenses, NTLRDs and NTLIFA’s >Trading Losses > Insert the loss in the box for ‘‘Carried back against profits of a previous period’’
3. Switch to SimpleStep mode
4. Go to Finalising the return
5. Tick the box for an earlier period?
Once these entries are completed, you may then process the current period submission as usual. If the period being amended for the losses being carried back, falls outside of the amended return filing window, you may still amend the return to send to HMRC as a paper return, alternatively, you can write to them with the details of the loss, (explained at the end of this article).
If you would like to process an amendment for the earlier year, please complete the entries as described below. Instructions are given for both version 3 and version 2 of the CT600 forms, depending upon how far back your return period is.
Entries to make for the previous year return period(s) in which loss relief is being claimed: Return period starting on or after 01/04/15
HMRC Forms mode (Version 3)
Simple Step mode (Version 3)
Entries to make for the previous year return period(s) in which loss relief is being claimed: Return period starting prior to 01/04/15
HMRC Forms mode (Version 2)
Simple Step mode (Version 2)
Re-submit a full return for a refund of the difference in Corporation Tax – Please note: this will have to be done via a paper submission.
Alternative to sending an amended paper return if the filing window has closed
If the window for amendment of the previous return has closed, (In excess of 12 months after the filing deadline) you can write to your company's Corporation Tax office including the below:
For further information, please the HMRC claiming a loss.