HMRC are writing to companies and their tax agents where they have identified inconsistencies between CT600s and the accompanying tax computations, relating to corporate losses.
On 1 April 2017, the Corporation Tax loss rules were reformed. This changed the treatment of many brought-forward losses.
HMRC have identified a number of cases where one or more boxes on submitted CT600s incorrectly included brought-forward amounts. The boxes are:
- 805 and/or 810 UK property business losses.
- 830 and/or 835 non-trading losses on Intangible fixed assets.
- 850 and/or 855 management expenses.
HMRC state that in affected cases they will use the loss figures submitted in the tax computations and not those recorded in the CT600 boxes above.
- No action is required if the company agrees with this approach.
If the taxpayer or their agent believes the CT600 entries are in fact accurate, they should e-mail HMRC within 60 days of receiving the letter explaining why the CT600 entries are correct.
HMRC state that, going forward, Brought-forward losses should not be included in the CT600 boxes listed.
- If the software does not allow those entries to be overwritten, a free format note should be included in the tax computations
- If inconsistencies continue to arise, HMRC will use the figures in the Tax computations as the accurate loss values for the company.
Useful guides on this topic
Losses: Trading and other losses
When can a company offset its losses? What restrictions are there? How are loss claims made?
Adviser's Guide: Property Business, profits and losses
What is property income? How is it taxed? How are profits calculated? How are losses relieved? Is NI paid on property income? Is property income classed as a business activity?
Tax adjustments to profits: Corporation Tax
What tax adjustments must be made to profits for Corporation Tax purposes?
Company tax claim checklist
What are the time limits for Corporation tax claims and elections? How are claims and elections made?
Goodwill and the intangibles regime
How does the Corporation Tax intangible regime work? What is the treatment of goodwill for Corporation Tax? Do companies account for goodwill differently?
External links
Source: CIOT
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