COVID-19: My company has made a loss – what are the tax implications?

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. See our Knowledge Hub for further details on making R&D claims. 

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. For example, a company with a 31 March year end may have made a large loss since April, but would have to wait until after filing it’s tax return for 31 March 2021 to receive a repayment.

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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