Loss Carry Back Extension

Finance Act 2009 announced the extension of the loss carry back provisions for companies and unincorporated business.  Originally the losses to which the new provisions applied were those arising in accounting periods ending in the period 24 November 2008 to 23 November 2009 (for companies) and 2008/09 (for unincorporated businesses).  The Finance Act introduced legislation so that losses arising in accounting periods from 24 November 2009 to 23 November 2010 (for companies) and 2009/10 (for unincorporated businesses) will also be eligible for the extended loss carry back provisions.

The amount of trading losses that can be carried back to the preceding year remains unlimited. After carry back to the preceding year, a maximum of £50,000 of unused losses will be available for carry back to the earlier two years. The £50,000 limit applies separately to the unused losses of each 12 month period or tax year. For example, for unincorporated businesses, a separate cap will apply to the extended carry back of losses made in each of the tax years 2008/09 and 2009/10.

There appears to be an anomaly in that in certain circumstances not all the losses may be relieved as the taxpayer cannot, it seems, choose the year of off-set in order to maximise the loss carried back.  Representations are being made to HMRC with to see if this can be amended when the legislation is enacted.

For further information or specific advice on the above please contact Craig Hughes on 0115 983 5595 or 07717 840596 or email chughes@edftax.co.uk.