SolvedCTM04540 | Corporation Tax: trading losses - relief against total profits: preceding accounting periods: examples showing later profits relieved before earlier
From HM Revenue & Customs · Company Taxation Manual
Example 1
Company H made a trading loss of £35,000 in the accounting period 1 January 2001 to 31 December 2001. Other CT profits of this period amounted to £20,000. The company continues to trade. The CT profits of earlier accounting periods were as follows.
| Accounting period | CT Profit |
|---|---|
| 1 July 2000 to 31 December 2000 | £10,000 |
| 1 July 1999 to 30 June 2000 | £20,000 |
The trade in which the loss was incurred was carried on throughout the whole of the period from 1 July 1999 to 31 December 2001.
Company H claims relief under CTA010/S37 to extend to the profits of accounting periods within the ‘preceding period’. The ‘preceding period’ is the twelve months ending on 31 December 2000.
Relief is given as follows.
| Accounting period | Amount |
|---|---|
| Against profits of the accounting period to 31 December 2001 | £20,000 |
| Against profits of the accounting period six months to 31 December 2000 | £10,000 |
| Against profits of the accounting period twelve months to 30 June 2000 | £5,000 |
| Total amount of profits relieved | £35,000 |