Using a Corporation Tax BF loss.

Hi,

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

Comments

  • Gingeraccounts
    Gingeraccounts Registered Posts: 9
    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
    TreadStone AAT Licensed Accountant Posts: 280 ? ? ?
    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
    wills135 Registered Posts: 30
    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
    TreadStone AAT Licensed Accountant Posts: 280 ? ? ?
    Maybe if you supply the accounting years concerned and the adjusted profit (loss) figures for those years/periods.....
  • wills135
    wills135 Registered Posts: 30
    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
    TreadStone AAT Licensed Accountant Posts: 280 ? ? ?
    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.
    wills135
  • burg
    burg Moderator, FMAAT, AAT Licensed Accountant Posts: 1,441
    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
    Regards,

    Burg
  • wills135
    wills135 Registered Posts: 30
    Hi,

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

    Thanks
  • burg
    burg Moderator, FMAAT, AAT Licensed Accountant Posts: 1,441
    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
    Regards,

    Burg
  • wills135
    wills135 Registered Posts: 30
    Thank you
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