CFM32080 - 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 December 2019
- Trade profit - £20,000
- Non-trade loan relationship deficit - £5,000
Year ended 31 December 2018
- Trade profit - £10,000
- Non-trade loan relationship profot - £7,000
If Hyck Ltd does not surrender any of the non-trading loan relationship deficit arising in year ended 31 December 2019 as group relief, or make a claim to set it against profits of the same period, any carry-back claim can be made for the full £5,000.
Interaction with deficit brought forward
If however, Hyck Ltd also has the following result in the year ended 31 December 2017
- Trade loss - £4,000
- Non-trade loan relationship deficit - £3,000
Relief for the deficit carried forward from earlier accounting periods has priority.
- Non-trade loan relationship profit - £7,000
- Non-trade loan relationship deficit b/f - £3,000
- Profit available for reliefs - £4,000
A claim for carry back of non-trading deficit for the year ended 31/12/19 to the earlier accounting period is therefore limited to £4,000.