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Dear Sir,
In example 3, when we carry back the losses to be set off against the total profits of the previous 12 months, you have set off the losses against the entire 26,000 profits of the 9 month period but have only set off 3/12 of the 3 month period.
Why don’t you do the same with the 9 month period? i.e, set off the loss only up to 9/12 of the total profit.I would recommend that if not already you work through the OT notes and lectures and think a little more carefully about the situation you are dealing with here – ALL of the profits of the preceding 9 month accounting period arise within the 12 months preceding the loss making period and therefore ALL of these profits are available for relief. Only 3 months of the 12 month period prior to it (y/e 31 March 2017) arise in the 12 months prior to the loss making period so only 3 months (3/12) of those profits may be relieved.
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