LAM15400 | Excess expenses, losses and deficits: Loss reform: deduction of carried forward losses from BLAGAB trade profits 1 April 2017 to 5 July 2018 FA12/S124D

BLAGAB trade losses carried forward must always be set first against BLAGAB trade profits of the period. Between 1 April 2017 and 5 July 2018 the set-off of carried forward BLAGAB trade losses against BLAGAB trade profits was restricted to the “relevant maximum” permitted by FA12/S124D.

The relevant maximum is the sum of–

• 50% of the company’s “relevant BLAGAB trade profits” for the accounting period, and

• the company’s BLAGAB trade profits deductions allowance for the accounting period.

A company’s relevant BLAGAB trade profits for an accounting period are–

• the company’s BLAGAB trade profit for the accounting period, less

• the company’s BLAGAB trade profits deductions allowance for the accounting period.

If the deduction allowance exceeds the profit, the company’s relevant BLAGAB trade profits for the accounting period are nil.

If carried forward BLAGAB trade losses exceeded the relevant maximum the excess attributable to losses incurred on or after 1 April 2017 could be set against the total profits or surrendered as group relief (CTA10/S188BB).

LAM15410 explains how carried forward losses can be set against total profits in a company carrying on BLAGAB for periods between 1 April 2017 to 5 July 2018.