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Company losses are automatically carried forward to a later period to use against future profits.
12 August 2024
Company losses are automatically carried forward to a later period, to use against future profits. A claim can be made to carry back losses to the previous year, so this could provide a valuable cash repayment. Companies in groups can surrender losses to profit-making companies.
Where R&D qualifying activity is being carried on, it is also possible to cash-in losses for a repayable amount from HMRC, if a claim is made.
Claims relating to losses are made via the formal corporation tax return (CT600), so follow the company’s year end and need financial statements and tax computations to be prepared. It may take HMRC 6-8 weeks to process such a claim. This could mean that turning losses into cash could not happen for some companies for some time.
In these cases, it might be worth considering shortening the company’s accounting period. This could enable cash to be released more quickly from losses i.e. by accelerating a loss carry back or R&D claim. There are commercial factors to consider so get in touch with your usual Bishop Fleming contact to discuss the options.
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