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HMRC internal manual

Company Taxation Manual

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HM Revenue & Customs
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Corporation tax self-assessment (CTSA): Claims and elections: Affecting more than one accounting period

FA98/SCH18/PARA58 sets out the rules for claims involving more than one accounting period. This happens when:

  • the event giving rise to the claim occurs in one accounting period (the period to which it “relates”), and
  • it affects one or more other accounting periods (whether or not it also affects the period to which it relates).

Example

  • Company B makes a trading loss in the accounting period ended 31 December 2010 and carries this back to set against profits of the accounting period ended 31 December 2009.
  • The claim relates to the accounting period ended 31 December 2010. It also affects the accounting period ended 31 December 2009.

The rules are basically the same as those for a claim affecting only one accounting period. If a company makes a claim or election:

  • that relates to or affects an accounting period for which it has already made a return, and
  • it could make or give effect to the claim by amendment of that return.

Paragraph 58 (2) says you must treat the claim or election as an amendment of the return.

The provisions that apply to amendment of returns generally apply to a Paragraph 58 (2) amendment - see CTM93300.

Paragraph 58 (3) applies the rules in TMA70/SCH1A if, and to the extent that, a company cannot make a claim in a return or amended return. You then have to give effect to the claim by discharge or repayment - see CTM90635.

The following example summarises the rules outlined in this and the previous paragraphs.

Example

For the accounting period ended 31 March 2010 Company C has a trading loss of nil and other profits of £50,000. For the accounting period ended 31 March 2011 it has a trading loss of £100,000 and other profits £40,000.

  • Company C claims relief for the loss against the profits of both accounting periods. The claim:
    • relates to the accounting period ended 31 March 2011,
    • affects both accounting periods.

 

  • Company C makes the loss relief claim by including it in its return for the accounting period ended 31 March 2011.
  • It also gives partial effect to the claim by setting off £40,000 of the loss against the other profits for the accounting period.
  • If Company C can still amend its return for accounting period ended 31 March 2010, it will give effect to the carry-back element of the claim by amending its return and self assessment for that accounting period.
  • If Company C is out of time to amend the return for accounting period ended 31 March 2010 the carry-back element of the claim falls within the TMA70/SCH1A rules. You would give effect to the claim by discharge or repayment - see CTM90635.
  • Company C indicates in the CT computation for accounting period ended 31 March 2011 that the claim for loss relief is to the accounting period ended 31 March 2010.

You should regard this as:

  • the making of an amended return for accounting period ended 31 March 2010, if that return is not out of time for amendment, or
  • if the return is out of time for amendment, the making of a claim under TMA70/SCH1A.