Due to COVID-19, corporate finances will be considerably different from previous years. It is for this reason that if you have made a loss in the current year, it is vital that you report this to HMRC as soon as possible. This is so it can be set against earlier profits to generate a refund of corporation tax paid for that earlier year.
Who Qualifies For The Corporate Loss Relief?
In order to qualify for this relief, the current year loss must arise from the same trade or activities as the earlier profitable activities. HMRC will take into consideration that alterations may have been made to your operations, such as a restaurant switching takeaway, so will class this as a continuation of the same trade. However, if you have taken on a new business venture to replace your old company, then this will be considered a new trade. Unfortunately, the current losses cannot be carried back to set against the old trade.
Typically, you can only submit a loss claim once the current accounting period has ended, and you can determine the profit or loss for that particular period. However, HMRC will accept draft accounts for the current period as evidence that a loss is available to carry back to the previous period.