Carry a company trading loss back to previous years
Corporation Tax relief may be available where your company or organisation makes a trading loss. A qualifying trading loss may be used to claim relief from Corporation Tax by offsetting the loss against profits in previous years.
This could be an especially useful option for the many companies that have been adversely affected during the pandemic and may have incurred significant losses. Carrying back a trading loss would allow companies to seek relief for the losses by carrying them back to an earlier profit-making period resulting in a possible reclaim of Corporation Tax.
Usually, such a claim could only be made once a Corporation Tax return has been prepared and submitted to HMRC. However, in exceptional cases HMRC will allow claims to be carried back based on anticipated losses before the end of a current accounting period. Companies making a submission to HMRC requesting the early carry back of losses would need to provide HMRC with full evidence to support such claims.
Losses may only be carried back against profits of a preceding accounting period if the company was carrying on the trade (in which the loss was incurred) at some time in that accounting period.
Any claim for trading losses forms part of the Company Tax Return.
Different rules apply if a company makes a loss in its final period of trading.