COM50140 - Claims / reliefs: loss and non-trading deficits carry-back: c/b loss & non-trade deficit - no asst

When to use Function RECB

You need to use Function RECB (Record Amounts Carried Back) to allow a carry-back when

• A return has been logged for an AP

And

• You later receive an acceptable claim that results in a carry-back to that AP

And

• You have not yet made an assessment for that AP and you are not in a position to make one

And

• The CT liability for that AP is reduced by the carry-back

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The amount to enter in Function RECB

The figure to enter in Function RECB is the tax effect of the carry-back. In the case of a loss or non-trading deficit this will be the tax effect of the loss or non-trading deficit you want to carry back.

The following example illustrates this

• A Ltd’s return for AP 1/1/93 to 31/12/93 shows trading profits of £20,000
• The tax charge (25%) is £5,000 paid by the due date
• The record in Function VPPD (View Payment And Posting Details) shows a return charge posting of £5,000 matched by a payment posting of £5,000
• A Ltd claims to carry back trading losses from AP 01/1/95 to 31/12/95
• it is clear a loss of at least £12,000 will be available for set-off in the 1993 AP

As the accounts are still under enquiry, you cannot yet agree final figures. However, you agree to make a provisional repayment.

• The amount you enter in Function RECB is the difference between the liability if no carry-back is allowed and the liability if the loss carry-back of £12,000 is allowed. See Example 1 (Word 37KB)

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Amending an existing carry-back

You can also use Function RECB if, unusually

• You need to reduce the amount of an existing carry-back relief, whether it was given effect using Function RECB or in an assessment

And

• You are not in a position to make or amend the assessment

Note: You cannot use Function RECB to reduce an existing carry-back out of which a repayment has been made. The only option is to set the Clerical Interest Indicator (CII (Word 32KB)). For more information see subject ‘Clerical Interest Indicator’ (COM50090).

Then use Function ARTA (Amend Returned Tax Amount) to increase the charge. Function ARTA allows you to put the correct tax into charge, but it cannot correct the interest position.

If you use both Function ARTA and Function RECB the computer assumes that the figure you record in Function ARTA for Total CT due is the liability net of any carry back relief posted using Function RECB.

Example 2 (Word 30KB) illustrates such a case.

For a list of functions to use in particular situations, see COM50141.