Tx notes fa22 Final

June 2023 to March 2024 exams
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June 2023 to March 2024 exams
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Chapter 18
TAX ADJUSTED LOSSES – 
COMPANIES 
1. Trading and Non-Trading losses - introduction 
1.1. Trading losses 
If a company makes a trading loss, its trading income assessment for that period to include in the 
corporation tax computation is nil. 
Loss relief:
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The loss may then be relieved in the current period against Total Profits, 
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followed by a 12 month carry back to an earlier period(s) against Total Profits and/or 
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be carried forward to relieve against ANY part of future total profits. 
Note that if a company wishes to carry back a loss then it MUST firstly use the loss in the current 
period and unlike with the carry forward claim, partial claims are NOT allowed in either the current 
period or carry back claim.
Choice of relief: 
Factors to consider when choosing which loss reliefs to claim will include, the cash flow benefit of 
achieving relief at the earliest available opportunity, avoid wasting any qualifying charitable 
deductions and reducing profits below the relevant profit limit to avoid having to make quarterly 
instalment payments.
Current period and carry back claims cannot be partial as stated above and hence run the risk of 
wasting relief for qualifying charitable donations as Total Profits are before the deduction of 
donations and if they are unused they will be wasted. 
If however the loss is carried forward a partial claim would be available so as to avoid wasting any 
qualifying charitable donations.
A current period claim followed by a carry back claim will however have a cash flow advantage over 
a carry forward claim thus using the loss at the earliest available opportunity.

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