CTM04135 | Corporation tax: trading losses: general: relief for losses carried forward: claims

CTA10/S45, CTA10/S45A to S45B, CTA10/S45F

Companies can choose whether and which of their trade losses carried forward are used in subsequent periods.

Relief against total profits

Where a company has a trade loss carried forward under S45A, it will only be relieved if the company makes a claim under S45A (5).

It is not necessary for the loss to be used to the full extent possible. The company can specify the amount of the loss they want to relieve. The remainder will generally be carried forward to the subsequent period.

Claims must be made within two years of the end of the period affected or such further period as HMRC allows (S45A (7)).

The period affected is the period in which relief for profits will be affected by the claim. It is not the loss-making period but the period in which the company is claiming to use, or not to use, the loss.

Relief against profits of the same trade

Where a company has a trade loss carried forward under S45 or S45B, the loss will automatically be set against profits of the same trade.

However, the company can make a claim to prevent this. They can do so where losses are carried forward under either section and would be set against profits arising from 1 April 2017.

For losses carried forward under S45, the claim is made under S45 (4A). For losses carried forward under S45B, the claim is made under S45B (5).

The company can claim for none of the loss under the relevant section to be relieved. They can also claim for a part of the loss to be relieved. The remainder will generally be carried forward to the subsequent period.

Claims must be made within two years of the end of the period affected or such further period as HMRC allows (S45 (4C), S45B (6)).

Terminal relief for carried forward losses

When a trade ceases, a company may claim terminal relief for carried forward losses under S45F (2).

Relief under S45F will not be given unless the company makes such a claim.

In contrast to S45, S45A and S45B, claims for relief under S45F must be made within two years of the end of the period in which the trade ceased or such further period as HMRC allows.

However, a claim cannot be made if the trade has ceased because it was transferred to a successor company under common ownership (CTA10/S944C, CTM06065).