EM4816 - Penalties: Incorrect Returns, Accounts etc: Company Losses Carried Back
This guidance applies to returns with a filing date on or before 31 March 2009.
Guidance for returns and other documents with a filing date on or after 1 April 2009, where the return relates to a tax period beginning on or after 1 April 2008, is contained in CH80000+.
Where a culpable tax difference has been established for an earlier year and that year is affected by a loss relating to a later year claimed to be carried back, the loss should be regarded as primarily allocated against any non-culpable tax.
Example
APE 31 December 2002
Corporation tax payable based on return as submitted | 30,000 |
Additional tax established by enquiry (culpable) | 4 0 , 0 0 0 |
Total tax payable in first instance | 70,000 |
APE 31 December 2003
CT return received including claim to loss relief that amends the previous years return by £50,000 tax.
No enquiry is made into the return or the claim.
Revised Computation of tax for Enquiry year (APE 31 December 2002)
Corporation tax payable based on return as submitted | 30,000 | |
Additional tax established by enquiry | 40,000 | |
less: Loss relief (total £50,000) | 3 0 , 0 0 0 | 2 0 , 0 0 0 |
Non-culpable tax | nil | |
Culpable tax | 20,000 |
The ‘tax difference’ is the difference between the final tax after loss relief (£20,000) and the original tax after loss relief (nil).