- April 1, 2022 at 6:28 am #652480tabasumzeParticipant
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Bpp workbook(FA2020) pg.404, illustration no.2
Monster Ltd has the following results:
Year ended Trading profit/(loss) Chargeable gains QCD
31.3.18 2000 35,000 (30,000)
31.3.19 (500,000) 250,000 (20,000)
31.3.20 100,000 30,000 (20,000)
31.3.21 120,000 45,000 (20,000)
After relieving the loss in the current period, carry back relief claim can also be made for the year ended 31 March 2018.
This will be against total profits of (35,000+2000)= 37,000.
This claim will waste QCD of 30,000 and so would use 37,000 of loss to save tax at 19% on 7,000 (35,000+2000-30,000).
A carry back claim should therefore not be made.
My question is, if carry back claim saves tax at 19% on 7000 (i.e.1,330), why is carry back claim not made?
If the answer is to use up QCDs against total profits, using up QCDs will result in payment of Corporation tax at 19% on 7,000.
Is it not a better option to make a claim to carry back and waste QCDs just to save tax at 19% on 7,000?April 5, 2022 at 12:05 pm #652739Tax TutorMember
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In a word – No – the best option would be to carry forward the loss in order to not waste any of it – did the answer not explain that?
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