Relieving losses

Firstly you must distinguish between a question testing income tax losses for the UNincorporated trader and a corporation tax question testing loss reliefs available for an incorporated trade.
If dealing with a corporate loss then review OT notes, chapter 18 section 1.1 on page 111 which discusses the objectives you would seek to achieve to get the best use from a trading loss:
– relief at the earliest available opportunity – cash flow
– avoid wasting qualifying charitable donations (current and carry back claims both target total profits which is before deduction of donations
– relief at the highest rate (a carry back claim using the loss to save tax at 20% is better than a carry forward claim to save tax in the future at 19%)
– use losses to avoid quarterly instalment payments – especially relevant when dealing with groups
If dealing with income tax then again using at the earliest available opportunity but trying also to avoid wasting the PA and seeking to avoid paying tax at higher rates – therefore better to carry forward and save tax next year at 40% rather than use in the current and preceding tax years where although relief is received sooner it may only save tax at 20% and possibly wastes the PA.
Review lectures if you have time