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HMRC internal manual

COTAX Manual

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HM Revenue & Customs
Updated
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Claims / reliefs: loss and non-trading deficits carry-back: loss carry-back / repayment interest

In general, a trading loss carried back to an AP falling wholly within the previous 12 months has no interest consequences for the receiving AP and therefore needs no special treatment in COTAX, because the loss of the donating AP takes the interest effective date (EDP) of the recipient AP.

The only exception to this is if you are changing the rate at which the tax is charged. See COM50113 for further guidance on this area.

A trading loss carried back to an AP falling beyond the previous 12 months does have repayment interest consequences.

A claim to carry back trade losses may result in a repayment of CT or Income Tax for the earlier AP to which the relief is carried back.

In cases where a loss is carried back to an AP not falling wholly within the previous 12 months, S826(7A) ICTA 1988 provides that repayment interest is only payable from the due and payable date of the later AP in which the trading losses were incurred.

Example 1 (Word 30KB) illustrates this point.