SAM121181 | Returns: individuals returns: prior year adjustments: individuals returns (Action Guide)

Where an entry on the return gives rise to a prior year adjustment follow steps 1 - 14 below. This guide is presented as follows

Relief now for Trading losses - Steps 1 - 3
Post cessation or other business receipts treated as income of an earlier year or Backwards spreading of literary or artistic income - Steps 4 - 6
Farmer’s averaging or Literary / Artistic spreading - Steps 7 - 9
Loss to be carried back - Steps 10 - 14

Relief now for Trading losses

In Revenue Calculation cases, using the details given by the taxpayer in the Additional Information box on the return

1. Calculate the relief due at the rate of tax applicable to the return year

2. Make a pencil note on the return of the relief due

3. Enter the amount in TCS 2 box 16 during capture of the return details

Post cessation or other business receipts treated as income of an earlier year

In Revenue Calculation cases, using the details given by the taxpayer in the Additional Information box on the return

4. Calculate any additional liability for the earlier year at the rate of tax applicable to the earlier year

5. Make a pencil note on the return of the amount of the adjustment

6. Enter the amount in TCS 2 box 14 during capture of the return details

Farmer’s averaging or Literary / Artistic spreading

In Revenue Calculation cases

7. Calculate the increase or decrease in tax and Class 4 NIC liability for the earlier year at the rate of tax applicable to the earlier year

Note: Where a claim for Farmer’s averaging or Literary / Artistic spreading results in a reduction of the income level for the previous year and a claim for Retirement Annuity relief made in the previous year would be affected by the reduction in the income level, you must take account of the consequential impact on the RAR claim when dealing with the Farmer’s averaging or Literary / Artistic spreading claim

8. Make a pencil note on the return of the amount of the adjustment, noting whether there is an increase or a decrease in Tax and Class 4 NIC liability for the year

9. Enter the adjustment in TCS 2 box 14 and / or 15 during capture of the return details

Loss to be carried back

In Revenue Calculation cases

10. Check to see whether a claim has already been made

If a claim has been made and has been dealt with

11. Make a note on the return that relief has already been given

If a claim has not been made or, made and not dealt with

12. Calculate the relief due

13. Make a pencil note on the return of the relief

14. Enter the amount in TCS2 box 15 during capture of the return details