SACM11050 - Claims involving two or more years: share loss relief claims
Background
Share Loss Relief under s131 and 132 ITA 07 (SLR) allows the claimant to obtain relief in the tax year in which the allowable loss arose (“year 2”), the previous tax year (“year 1”) or both tax years. For more information on SLR, see VCM70100
The Supreme Court judgment in R (on the application of Derry) v HMRC (‘Derry’) means that, where a carry back SLR claim is made with regards to year 1, it is a claim made in that tax return. This is contrary to other loss carry back claims made under Sch 1B, which says the claim shall always relate to the later year (year 2).
Method of enquiry
Relief is claimed for the year in which the allowable loss
arose only.
There is no change to the law. If the SLR claim was made before the section 8
TMA 1970 notice was issued for year 2 (the year of the loss), then it was made
outside of a return. The SLR claim can be enquired into under Schedule 1A TMA
1970.
The loss made from the sale of the shares must also be included in the year 2
Self-Assessment tax return (SATR) when it is submitted. If an enquiry under
Schedule 1A TMA 1970 wasn’t opened into the SLR claim made outside the return,
an enquiry can be opened under section 9A TMA 1970 into the year 2 SATR
which should include the loss.
If the SLR claim was made in the year 2 SATR, then the SLR claim can only be
enquired into under section 9A TMA 1970. If the SLR claim was made after
the year 2 SATR was submitted but within the statutory time limit for an
amendment, the SLR claim is treated as an amendment to that year’s SATR. The
SLR claim can only be enquired into under section 9A TMA 1970.
The table summarises the position for claims made for the year in which the
loss was made:
| Timing of the SLR claim | How the claim is made | Type of enquiry needed |
|---|---|---|
| Before the section 8 TMA 1970 notice is given | Claim made outside of a return | Schedule 1A TMA 1970 |
| After the section 8 TMA 1970 notice is given | With the SATR | Section 9A TMA 1970 |
| After the SATR has been submitted but within the window to amend | As an amendment to the SATR | Section 9A TMA 1970 |
| After the window to amend the year 2 SATR has closed, but within the time limit to make the claim | Claim made outside of a return | Schedule 1A TMA 197 |
Relief is claimed for both years.
Where the claim is for relief in the year of the loss and the previous year,
this will be treated as two claims for tax administration purposes. There will
need to be a valid enquiry into both claims to be able to challenge both years.
The principles set out above apply to each year’s SLR claim.
There is more information about how an SLR claim should be made for two years at VCM74020 and VCM74030