Using a Corporation Tax BF loss.

wills135

Hi,

If a bf loss is used are there any bookkeeping entries needed? Or is it purely noted in the working papers? Thanks

Gingeraccounts

The loss brought forward should show in the balances brought forward in the accounts as a debtor. Therefore when you do the entries for the corporation tax charge in the current year, ie.
DR Corporation tax charge & CR Corporation tax liability, it will offset the loss brought forward in the accounts against the charge in the current year to show the amount now owing.

TreadStone

wills135 said:

Hi,

If a bf loss is used are there any bookkeeping entries needed? Or is it purely noted in the working papers? Thanks

The b/f loss will be catered for within the CT computation thus reducing the current year CT liability.

Any loss(es) b/f form part of the shareholders funds (capital & reserves) on the balance sheet.

wills135

Hi Guys, thanks for responding.

The issue I was getting stumped on was using a loss against a past return, for instance in 16/17 there is a loss, but, instead of carrying it forward, the choice is to go backwards, against 15/16.

Now to me, the value would be material, so, as per accounting standards - anything material in nature should involve the accounts and tax return being altered and re-submitted.

Maybe I've worded the initial question incorrectly, or I'm not connecting the dots.

Say profit, after adding back depreciation, disallowed expenses and such, results in a tax loss - this figure now that I have, is Dr to CT B/S? And if I want to use this CT tax loss against a prior period?

Thank you, I do appreciate your time.

TreadStone

Maybe if you supply the accounting years concerned and the adjusted profit (loss) figures for those years/periods.....

wills135

Hi

For example, 16/17 there will be a trading loss of £100,000
During 15/16 there was a profit of £200,000.

So would you make the entries you have offered, recall the 15/16 CT return to allocate the £100,000 loss you're carrying back, [or simply input where you want the loss relief to affect in the 16/17 return?] and leave the accounts submitted for 15/16 period alone, even though it is a material sum?

I know effectively it isn't a material adjustment as such for 15/16, yet it obviously is a material figure to omit, by turning a £200,000 profit into one of £100,000.

I've completely gone around in circles for something which is probably, ineffect, simple!

Thank you

TreadStone

You'll carry the 16/17 loss back on the current CT return (there's a tick box) to be relieved against the 15/16 profit. You'll have to write to HMRC to request the refund.

You don't need amend the previous yr accounts.

burg

Just to be clear the corporation tax loss itself does not need any action in the accounts. If however that loss is carried back and creates a refund of tax then this refund does need an entry

wills135

Hi,

So if that is done you'd need to recall the accounts from companies house, adjust and re-submit?

Thanks

burg

No in the current year accounts post an entry to CT prior year adjustment in the P&L and the other side to the CT liability

wills135

Thank you