SACM11005 - Claims involving two or more years: background and legislation

TMA70/Sch1B

Before the introduction of Self-Assessment and the Current Year basis of assessment, a claim to carry back losses to an earlier year meant that the assessment for that earlier year had to be re-opened by way of an enquiry into or an assessment on the earlier year. This is no longer the case.

For administraion purposes such claims are now almost all dealt with in accordance with TMA70/S42 and Sch1B and there is no need to re-open the earlier year where the claim affects more than one year.

The claims involved include the

  • carry back of losses under ITA07/S64
  • carry back of losses in the early years of trade under ITA07/S72
  • carry back of pensions contributions (not available after 5 April 2006)
  • averaging of farming profits under ITTOIA05/s221, and
  • averaging of literary and artistic profits under ITTOIA05/s221

The exception to this rule is for Share Loss Relief claims under s132 ITA07 

Each type of claim may be governed by a specific time limit set out in the relevant legislation. If that is not the case, the general time limit at TMA70/S43 will apply.

Share Loss Relief under section 132 ITA 2007: Supreme Court judgement in Derry

In April 2019 the Supreme Court (SC) handed down its judgement in the case of R (on the application of Derry) v HMRC ("Derry").
The SC found that Schedule 1B TMA70 doesn't apply to Share Loss Relief (SLR) claims made under section 132 ITA 2007 as HMRC had previously believed. Instead, sections 23 and 132 Income Tax Act (ITA) 2007 provide a self-contained claims code for SLR under those provisions.