As of 1 April 2017, wide ranging reforms of the tax loss rules for companies apply. The reforms introduce two main changes to the use of corporation tax losses as follow:
- A greater flexibility to the use of losses carried forward (Relaxation)
- A cap on the utilisation of losses available for offset for larger businesses (Restriction)
Accounting periods which straddle 1 April 2017, are treated as two separate accounting periods (pre- and post- 1 April 2017). Profits/losses are generally time apportioned, unless this gives rise to an unreasonable result which then can be apportioned on a ‘just and reasonable basis’.
Please note there are several new and strengthened anti-avoidance provisions in place in respect of the loss reforms which this article does not cover.
Find out more here.