Quarterly News

Getting some of your money back from the taxman

Where an unincorporated business makes a loss in a trade there are a number of ways in which the loss can be relieved. Very broadly the rules allow an offset against:

• all income and capital gains for the loss making year
• all income and capital gains for the previous tax year
• trading income from the same trade in subsequent years.

The carry back provision is now extended for trade losses made in the accounting period (or periods) which end in the tax year 2008/09. So a loss made in the 12 month period ending on 31 March 2009 will qualify but not a loss in a period ending 30 April 2009.

When can a business make a claim for loss relief?

The earliest time is after the end of the accounting period in which the loss is made and then submitting a claim to HMRC.

When can you get a tax repayment?

For existing loss provisions (eg the one year carry back) repayments will be made once the claim has been processed by HMRC. In some scenarios a repayment will not be made but will instead be deducted from a tax liability. For the new loss relief provision, HMRC will accept a loss claim but will not repay the tax until after Budget Day 2009.

What about companies?

There are similar rules for trading losses in companies but the loss must be made in an accounting period ending between 24 November 2008 and 23 November 2009.

Please talk to us

If you are currently making losses, please talk to us about these provisions so that we may maximise your entitlement to loss relief and also help to obtain an early tax repayment. This is particularly relevant if you are an unincorporated business as we may need to consider changing your accounting date so that your current losses fall into the current tax year.

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