Trading Losses - BTX A2011

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anniebabe
anniebabe Registered Posts: 595 Epic contributor 🐘
Hi Guys
Just working through the BPP Question Bank, page 34
Pennington Ltd produced the following results
2009 2010 2011
Trading profit/loss 62000 20000 (83000)
Interest Income 1200 600 1200
Gift Aid Donation 100 50 100

Compute Pennington Ltd taxable total profit for the above accounting period
the trading loss available to carry forward at 2011 is?

I thought that I had understood this, but when I turned to check the answer I had written, I find that they have carried the loss from 2011 back to 2009 - I thought you could only carry back 1 year?
please help, words off wisdom please. :)

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  • Diddy Mau
    Diddy Mau Registered Posts: 238 Beyond epic contributor 🧙‍♂️
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    Hello Anniebabe,

    Hope this helps...There is a specific rule, which states if a compnaies accounting period ends between a specific date, think Nov 08 to Nov 11?? then the loss can be extended 3 years but has a limit then must be carried forward.

    Sorry cant be more speciifc, let me know if this rule isnt in your book. I will check my notes later, mine are for 2010 tax but think this rule is the same
  • anniebabe
    anniebabe Registered Posts: 595 Epic contributor 🐘
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    I will look now - but havent seen it upto now in the Osborne Book, I dont have the text book for BPP just the question bank. Thanks for helping.
  • anniebabe
    anniebabe Registered Posts: 595 Epic contributor 🐘
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    No, I honestly cant see that mentioned, if anyone knows where that is in the Osborne Book, will they please reply. thanks.

    Kaplan book says, when a company ceases to trade it can carry back the loss for 36 months rather than 12 - but this is not examinable.
    Cant find any mention of carrying back trading losses for more than 12 months generally. wonder if it is a mistake? I am doing FA2011
  • Diddy Mau
    Diddy Mau Registered Posts: 238 Beyond epic contributor 🧙‍♂️
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    Hi
    I dont use the books. but managed to find this:
    For accounting periods ending between 24 November 2008 and 23 November 2010, the carry back period is extended to 36 months, subject to a maximum carry back of £50,000 once carry back extends beyond the usual 12 month period.
  • anniebabe
    anniebabe Registered Posts: 595 Epic contributor 🐘
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    Ok, thanks for that - I can not see it anywhere in my books, will keep that in my head incase it crops up, and that is from FA2010?
    so even though the loss occurred in 2011 they can use old rules? sounds very confusing. :/
  • Jo Clark
    Jo Clark Registered Posts: 2,525 Beyond epic contributor 🧙‍♂️
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    anniebabe wrote: »
    Hi Guys
    Just working through the BPP Question Bank, page 34
    Pennington Ltd produced the following results
    2009 2010 2011
    Trading profit/loss 62000 20000 (83000)
    Interest Income 1200 600 1200
    Gift Aid Donation 100 50 100

    Compute Pennington Ltd taxable total profit for the above accounting period
    the trading loss available to carry forward at 2011 is?

    I thought that I had understood this, but when I turned to check the answer I had written, I find that they have carried the loss from 2011 back to 2009 - I thought you could only carry back 1 year?
    please help, words off wisdom please. :)


    Hello Anniebabe

    The loss has not been carried back more than two years.

    Working through the question there is 'current year relief' of 1,200 and for the year 2010 'carrryback relief' of 20,600 is available.

    The second part of the question asks what is the loss carried forward. When you complete the loss memo, you start with the 83,000 loss and relieve (reduce) it by the 1,200 (2011) and 20,600 (2010) which leaves a balance of the loss of 61,200 to carry forward.

    Hope this makes sense or it means I have misunderstood the question!

    Let me know what you think.


    JC :o
    ~ An investment in knowledge always pays the best interest ~
    Benjamin Franklin
  • anniebabe
    anniebabe Registered Posts: 595 Epic contributor 🐘
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    Hi Jo
    Now I have had a break and looked at it again, its making sense, ive obviously not looked at it properly.
    Need to take more breaks.
    Thanks Again
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