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| *Ostroff, Fair and Company>>>United Kingdom Taxes |
I have made losses for three tax years. How Many tax years can you add these back? |
I finished my business in 2005 and made a small loss. In 2004, I made a large loss. In 2003 I made a mistake and need to alter the profit. I understasnd you can add these back to previous years where you have made a profit. Can any one tell me how many years it is possible for and if it is accumulative. many thanks I assume that you are talking about tax years ending on 5 April, rather than accounting years. First of all, you will need to re-open the 2003 year, as it is now out of date to do a simple amendment. The deadlne expires on 31 January nearly two years after the end of the tax year i.e. 31 January 2005. You need to write to the Inland Revenue and make an 'error or mistake' claim under s.33 TMA 1970. Concerning the losses, the loss for the last 12 months of trade can be carried back to the profits of the previous three years, later year first. This is known as Terminal Loss Relief under s.388 ICTA 1988. The 2005 loss could therefore be carried back to 2003 and set against your trading profits for that year. Any remainder could be carried back to any 2002 profits. The 2004 loss can be set against other income in the same or previous year, under s.380 ICTA 1988. Again, this year is out of date so you will need to re-open that year as well. Depending when you started to trade, you may have some overlap relief to claim as well. Losses can be complicated. Speak to an accountant to clarify the position and check the loss claims. As far as I am aware it is only 1 year. |
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