| Overview |
Where a company has made a trading loss in the current accounting period, it may be possible to carry that loss back and offset it against profits of the preceding accounting period, resulting in a repayment of Corporation Tax already paid. This article explains how to enter a trading loss carry-back in BTCSoftware.
| ⚠ Important: HMRC rules on trading loss carry-back are specific and time-limited. A loss can generally be carried back one year (or up to three years under the temporary extended loss carry-back rules introduced for COVID-19 periods). Always verify the applicable rules for the client's specific accounting periods before making a carry-back claim. |
| HMRC Rules — Trading Loss Carry-Back |
- A trading loss can normally be carried back to offset against profits of the immediately preceding 12-month accounting period.
- The carry-back claim must be made within two years of the end of the loss-making period.
- A claim to carry back a loss must be made in the CT return for the loss-making period.
| How to Enter the Carry-Back in BTCSoftware |
- Open the Corporation Tax return for the loss-making period.
- Navigate to the CT600 form.
- Locate the Loss Carry-Back section — this is typically within the Losses or Reliefs section of the CT600.
- Enter the amount of loss to be carried back in the relevant box.
- Run Check and Calculate — BTCSoftware will calculate the effect on the tax liability for the loss-making period.
- The computation will show that the loss carry-back has been claimed — review this before submitting.
| Amending the Prior Year Return |
Carrying back a loss to a prior period means the prior year CT return will need to be amended to reflect the reduced liability and the repayment due:
- Open the CT return for the prior (profitable) period.
- Navigate to the losses section and enter the amount of loss being relieved from the current period.
- Recalculate the CT liability — it will reduce to reflect the loss relief.
- Submit the amended prior year return to HMRC.
- HMRC will process the overpaid tax as a repayment.
| ✔ Tip: Note the HMRC reference number from both the original and amended submissions. Keep both in your working papers as evidence of the carry-back claim. |
| Frequently Asked Questions |
Q: Can I carry a loss back more than one year?
A: Under normal HMRC rules, the carry-back period is one year. Extended carry-back of up to three years was temporarily available for accounting periods ending between 1 April 2020 and 31 March 2022 under COVID-19 relief measures. For current periods, the standard one-year rule applies.
Q: The prior year CT return has already been submitted — can I still amend it?
A: Yes. CT returns can be amended within 12 months of the statutory filing deadline (generally 12 months after the accounting period end). Amendments outside this window must be made by writing to HMRC.
Q: How do I know how much loss is available to carry back?
A: The available loss is shown in the CT computation for the loss-making period. The maximum carry-back is the lower of the current year loss and the prior year profits.