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when a company seeks to offset a trading loss, it must first deduct from current year and then the preceding 12 months,
my question is, are we only allowed to deduct the carryback relief for the first 12 months only? or further 12 months ? eg lets say we’ve made a loss in18′ but profits in 17′ and 16′ so am i allowed to carryback the leftover losses to 16′ too or only 17?
thank you
Have you worked through the OT notes and lectures?
1) A company does NOT have to firstly deduct a trading loss in the current CAP – it may choose instead to simply c/f the loss. If however a company wishes to carry a loss back to an earlier CAP then it MUST indeed firstly use the loss in the current CAP before a carry back claim may be made
2) The rule is clear on the carry back as you yourself state above – the loss is carried back against the total profits of the 12 months preceding the CAP of loss. The only time a loss may be carried back for a longer period is when dealing with terminal loss relief on the cessation of trading
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