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HMRC internal manual

Self Assessment Manual

Returns: trust returns: prior year adjustments: trust returns

In a Revenue Calculation case it will be necessary to calculate prior year adjustment claims prior to the calculation of the liability in the Technical Support System (TSS) and for repayment to be made where appropriate.

The claims can be for the following

  • Relief now for Trading Losses
  • Loss carried back
  • To tax post cessation receipts as income of an earlier year
  • To forward literary or artistic spreading
  • To backward literary or artistic spreading
  • A negative adjustment for Farmer’s averaging
  • A positive adjustment for Farmer’s averaging

A claim to carry back relief of one SA year to an earlier one gives rise to an overpayment or underpayment.

The adjustment is made in terms of tax and for interest purposes it increases or reduces the liability of the year in which the event occurs. The adjustment is calculated by reference to the income of the trust and the rate of tax of the prior year.

Where a claim is made on the return for relief now for Trading Losses to be brought back to the return year, the claim should be dealt with as a stand alone claim. More information is available in section ‘Claims Made Outside a Return’ (SAM114000 onwards).

Claims to carry back Loss relief may be made on the return or by letter. If a claim is made in advance of the return for the year in which the event occurred, some entries are required on the following return. Other claims must be made on the return.