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HMRC internal manual

Company Taxation Manual

Corporation Tax: trading losses - relief against total profits: preceding accounting periods: examples showing later profits relieved before earlier

Example 1

Company H made a trading loss of £35,000 in the accounting period 1 January 2001 to 31 December 2001. Other CT profits of this period amounted to £20,000. The company continues to trade. The CT profits of earlier accounting periods were as follows.

1 July 2000 to 31 December 2000 £10,000
1 July 1999 to 30 June 2000 £20,000

The trade in which the loss was incurred was carried on throughout the whole of the period from 1 July 1999 to 31 December 2001.

Company H claims relief under CTA010/S37 to extend to the profits of accounting periods within the ‘preceding period’. The ‘preceding period’ is the twelve months ending on 31 December 2000.

Relief is given as follows.

Against profits of the accounting period to 31 December 2001 £20,000
Against profits of the accounting period six months to 31 December 2000 £10,000
Against profits of the accounting period twelve months to 30 June 2000 £5,000
Total amount of profits relieved £35,000