CTM04540 - Corporation Tax: trading losses - relief against total profits: preceding accounting periods: examples showing later profits relieved before earlier
Example 1
Company H made a trading loss of £35,000 in the accounting period 1 January 2001 to 31 December 2001. Other CT profits of this period amounted to £20,000. The company continues to trade. The CT profits of earlier accounting periods were as follows.
| 1 July 2000 to 31 December 2000 | £10,000 |
| 1 July 1999 to 30 June 2000 | £20,000 |
The trade in which the loss was incurred was carried on throughout the whole of the period from 1 July 1999 to 31 December 2001.
Company H claims relief under CTA2010/S37 to extend to the profits of accounting periods within the ‘preceding period’. The ‘preceding period’ is the twelve months ending on 31 December 2000.
Relief is given as follows.
| Against profits of the accounting period to 31 December 2001 | £20,000 |
| Against profits of the accounting period six months to 31 December 2000 | £10,000 |
| Against profits of the accounting period twelve months to 30 June 2000 | £5,000 |
| Total amount of profits relieved | £35,000 |
Example 2
The facts are the same as in example 1 except that the trading loss for accounting period ending 31 December 2001 is £45,000
Relief is given as follows.
| Against profits of the accounting period to 31 December 2001 | £20,000 |
| Against profits of the accounting period six months to 31 December 2000 | £10,000 |
| Against profits of the accounting period twelve months to 30 June 2000 | £10,000 |
| Total amount of profits relieved | £40,000 |
The set off for accounting period ended 30 June 2000 is limited (CTM04510) to the proportion (6 / 12 x £20,000 = £10,000) of the profits of the period that fall into the twelve months ending on 31 December 2000. The unused balance of the loss for accounting period ending 31 December 2001 (£5,000) is available for carry forward under CTA2010/S45.
