Ct600

CPenney

I am trying to complete my first ct600 (as an employee) - I am totally green as my employer is well aware but cashflow etc has meant we have to take the accounts inhouse.
I think I'm almost there but if anyone could help I would appreciate it massively!
My question is - the Company is a retail outlet but also has a small amount of income from a shop next door which is rented out. Looking at last years tax computation from the previous accountant, the net trading profit was 0 (£30k+ trading loss) Income from UK land and buildings £7k ish then £7k of trading losses utilised to reduce pctct to £nil.
This leaves a loss carried forward of around £30k. This years accounts show a loss of around £4K before the rental income of aound £8k. Can I utilise some of the loss carried forward against this? I'm using H
RC's ct600 (short) and it doesn't look as though I can?

Monsoon

I believe losses for CT is the same as income tax - you can offset losses in the year against profits in the year, but can only carry forward losses against future profits of the same trade. Therefore, I think that's right and they will be taxed on £4k of rental income. I think.

CPenney

Thanks Monsoon - that is what I was thinking - and looking at the CT600 it seems to be the case - but I hate not being 100% about anything!

Monsoon

I'm not 100% either. Look it up in the Corporation Tax Manual:

http://www.hmrc.gov.uk/manuals/ctmanual/

These are great for general guidance - but remember this is HMRC's interpretation of the law and they can be wrong! In this case though, it's a safe bet.

CPenney

Thanks again - just looked it up (and saved the link :0) )

Jmann

Carry forward loss can only be offset against next available future profits from the SAME TRADE. So I am afraid carry forward losses from previous years can not be offset against current year's property income.

I appreciate the cashflow is tight, but is it worth risk taking?

qwerty

It may be possible to do something about this. Were capital allowances claimed last year?

If so, you could amend last year's CT600 to reduce the capital allowances claimed, thereby reducing last year's trading loss and increasing the capital allowances pool brought forward this year.

You would then be able to claim more capital allowance this year, which would increase this year's trading loss available for offset against rental income, which will in turn reduce the amount of Corporation Tax payable.

Hope this helps.

Qwerty