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tax return question on carrying over a loss

Practical Issues
UncleBulgaria
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tax return question on carrying over a loss

#24429

Postby UncleBulgaria » January 19th, 2017, 1:25 pm

Hello all, I am helping a friend with an issue they have in working out how they can offset previous years of losses on their Sole Trader business with a profit this tax year.

Looking at their tax returns, they have put down some salaried income they made in the last 2 tax returns which meant they still made a net loss in the tax year, but they have not declared the loss as something to be carried over (they offset it against their salary to try to get some cash flow back).

Have they any option to use the net loss in that year to offset against this years tax return or has that boat sailed?

They asked my accountant (I'm a Ltd Company contractor) but they wanted £800 just to discuss the case - that would work out more than consulting a lawyer! I may recommend they find another accountant to speak to as this is out of my knowledge, so any recommendations of an affordable, London based accountant would be welcome.

thanks
Iain

PinkDalek
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Re: tax return question on carrying over a loss

#24481

Postby PinkDalek » January 19th, 2017, 4:30 pm

UncleBulgaria wrote:Hello all, I am helping a friend with an issue they have in working out how they can offset previous years of losses on their Sole Trader business with a profit this tax year.

Looking at their tax returns, they have put down some salaried income they made in the last 2 tax returns which meant they still made a net loss in the tax year, but they have not declared the loss as something to be carried over (they offset it against their salary to try to get some cash flow back).

Have they any option to use the net loss in that year to offset against this years tax return or has that boat sailed?



I think you are asking about claiming to carry forward losses not previously used but you haven't said in which tax year(s) the losses arose. The latter is relevant for time limit purposes.

This might help https://www.gov.uk/government/publicati ... osses-2016

Extract (if relevant):

"Claims not made in a tax return (stand-alone claims)

Normally you will make your claim to loss relief in your tax return, or amended return. But some claims may be made:

... after the time limit for amending the tax return has expired, for example a claim to carry losses forward may be made up to 4 years after the end of the year of loss ..."


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