If a company makes a trading loss of no more than £200,000 in an accounting period, it is now possible to claim relief for that loss even though the corporation tax return CT600 has not been submitted.  This will enable the company to carry back the loss to earlier years and obtain a repayment of tax previously paid. HMRC will, however, need evidence of the loss to support the claim, in particular, a PDF of the company’s management accounts for the period.

In determining whether the loss is no more than £200,000, the company must claim all available reliefs, particularly capital allowances. Where companies are members of a group, the £200,000 limit applies to each individual company. Note that for members of a group, the £2,000,000 limit on the temporarily extended carryback applies to the group as a whole. The extended carryback allows companies to carry back trading losses two further years in addition to the standard one-year carryback. We can, of course, advise you on the best use of trading losses.

Losses carried back will result in a repayment of corporation tax at 19%, whereas if carried forward against profits, the losses may save tax at up to 25% after April 2023.