SAM123161 | Returns: trust returns: prior year adjustments: trust returns (Action Guide)

Where an entry on the return gives rise to a prior year adjustment follow steps 1 - 13 below. This guide is presented as follows

Relief now for Trading losses - Steps 1 - 2
Post cessation or other business receipts treated as income of an earlier year or Backwards spreading of literary or artistic income - Steps 3 - 5
Farmer’s averaging - Steps 6 - 8
Loss to be carried back - Steps 9 - 13

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 any relief for the earlier year at the rate of tax applicable to the return year

2. Make a note on a separate piece of paper within the return of the amount of the relief due. Note that the relief is not to be entered in TSS, but treated as a stand alone claim and dealt with by repayment or set-off using function CREATE FREESTANDING CREDIT after the return charge has been recorded on the SA record. See section ‘Claims Made Outside a Return’ (SAM114000 onwards)

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

Or

Backwards spreading of literary or artistic income

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

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

4. Make a pencil note on the return of the amount of the adjustment. You may like to do so in the box that is to be entered in TSS (box 17.4)

5. Enter the amount when using TSS

Farmer’s averaging

In Revenue Calculation cases

6. 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

7. Make a pencil note on the return of the amount of the adjustment. Where the amount is an increase in tax and Class 4 NIC liability for the earlier year you may like to note the box that is to be entered in TSS (box 17.4). Where the amount is a decrease in tax and Class 4 NIC liability for the earlier year, the adjustment is to be treated as a stand alone claim and dealt with by repayment or set off using function CREATE FREESTANDING CREDIT after the return charge has been recorded on the SA record. See section ‘Claims Made Outside a Return’ (SAM114000 onwards)

8. Enter the box 17.4 amount when using TSS

Loss to be carried back

In Revenue Calculation cases

9. Check in the file to see whether a claim has already been made

If a claim has been made and has been dealt with

10. 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

11. Calculate the relief due

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

13. Do not enter the relief when using TSS. Treat the claim as a stand alone claim and deal with the relief by repayment or set off using function CREATE FREESTANDING CREDIT after the return charge has been recorded on the SA record. See section ‘Claims Made Outside a Return’ (SAM114000 onwards)