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HMRC internal manual

Corporate Finance Manual

From
HM Revenue & Customs
Updated
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Loan relationships: non-trading deficits: claims for set-off against profits of an earlier period: example

Claim to carry back loss to previous accounting periods: example

Hyck Ltd has the following results.

Year ended 31/12/2010

Trade profit £20,000
   
Non-trade loan relationship deficit £5,000

Year ended 31/12/2009

Trade profit £10,000
   
Non-trade loan relationship profit £7,000

If Hyck Ltd does not surrender any of the deficit as group relief, or make a claim to set it against profits of the period, any carry-back claim can be for the full £5,000.

Interaction with deficit brought forward

If however Hyck Ltd has the following result in the year ended 31/12/2008 

Trade loss £4,000
   
Non-trade loan relationship deficit £3,000

the maximum profit in the year ended 31/12/09 that can be relieved by a loss carried back from the year ended 31/12/10 is £4,000, as relief for the deficit carried forward has priority.

Non-trade loan relationship profit £7,000
   
Non-trade loan relationship deficit b/f £3,000
  £4,000