How to carry back corporate losses
Did your company have a bad pandemic? Don’t panic, you may be able to turn a loss into a useful tax repayment by carrying it back to set against profits made in earlier years.
If the loss is so big that it wipes out the profit made in the previous year, any excess loss can be carried back a further two years to set against those earlier profits.
This facility to carry back losses for up to three years only applies for losses arising in accounting periods that end between 1 April 2020 and 31 March 2022. So, if there are further large expenses that can be validly recognised in the current period, it may be best to book them in now and expand any current period loss.
You don’t have to wait until your corporation tax return is finalised to submit a loss claim. Once your accounting period has closed, you can submit a claim to use up to £200,000 of losses. Larger claims must be made in the corporation tax return.
HMRC has opened an online portal to claim those corporate losses. Ideally, the finalised and approved company accounts would be submitted with the loss claim, but if final accounts aren’t available, management accounts drawn up for the loss period will do.
Where the company is part of a group, a nominated group company must submit a written loss carry-back allocation statement that shows which companies in the group are claiming the allowable losses.
We can calculate how much loss is available to carry back and help you submit the loss claims.