Three year carry back of company losses

An extended loss carry back was announced at Budget 2021 which enables companies (and individuals) to make claims to carry back losses for a further 2 years than previous rules allowed. This temporary extension applies for losses arising in company accounting periods ending between 1 April 2020 and 31 March 2022.

An HMRC guidance note setting out further information on extended loss carry back for businesses is available.

Claims Process

Where the loss relief claim is no more than £200,000, HMRC are prepared to accept the loss claim in advance of submitting the CT600 company tax return and finalised accounts provided there is sufficient evidence to support the loss claim. HMRC will shortly provide an update on the preferred method for claim submission, which will look to get these claims processed as quickly and efficiently as possible and result in a refund of tax paid in earlier years.

Claims that exceed the de minimis of £200,000 must be made in a company tax return. Box 45 (claim or relief affecting an earlier period) on the CT600 should be completed and details of the carry back claims included in the computations that accompany the CT600 and accounts.

There is no need to submit amended returns for the earlier periods to which the extended relief applies as the claims will be treated as amendments to those returns. Amended returns for these periods will be rejected for online submission as, in most cases, they will be out of time for amendment.

Note that there is a £2 million limit on the losses qualifying for this extended loss relief and that limit applies to all companies within a 75% group. Such groups are required to nominate how the £2 million is allocated among group members.

Contact us if you need advice.