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Schedule D Case I Losses

Article ID
ias-5562
Article Name
Schedule D Case I Losses
Created Date
29th February 2008
Product
IRIS Business Tax
Problem
How can Schedule D Case I Losses be utilised?
Resolution
Sch. DI losses arising in the current period can be utilised against total profits of the period: – These losses are to be entered in Box 30 of the CT600. – Business Tax will utilise any available losses as far as possible against the total income of the company (S393A ICTA 1988). If the losses are not fully utilised in the period in which they arose, they can be carried back and used against the taxable profits of the preceding period: – Losses that are carried back are to be entered into Box 30 on the CT600 and an ‘X’ should be marked in box 31 of the CT600. – When carrying back DI losses, they have to be utilised as much as possible against total profits in the period in which they arose (S393A (2), (2A) and (2B) ICTA 1988). Terminal loss relief: Where a company ceases to trade, it can carry back its Sch. DI losses arising in the last 12 months of the trade against the taxable profits arising in the preceding 36 months (3 years) (S393A (2), (2A) and (2B) ICTA 1988 and S343 (4A) ICTA 1988). If the losses are not fully utilised in the period in which they arose, they can be carried forward and used against taxable profits of the Sch. DI profits of future accounting periods: – The brought forward losses are to be shown in Box 4 of the CT600 (S393 (1) ICTA 1988 and S411 (1) ICTA 1988). If the losses are not fully utilised in the period in which they arose, they can be carried forward and used against Sch. DIII interest, as long as it relates to the trading activity: – These losses must be entered in Box 19 of the detailed CT600 (S393 (8) ICTA 1988 and S208 ICTA 1988). Trading losses can be surrendered to group companies. The surrender to group companies can take place before any of the above: – This information should be entered on the CT600C. – The total loss surrendered should be entered in Box C2 on the CT600C (S403 (1) and (2) ICTA 1988, S403ZA ICTA 1988 and S393 ICTA 1988). The above only applies to limited companies. The treatment for losses utilised for a sole trader and partnership are dealt with in Personal Tax on the individual self assessment returns, therefore please send an email to support@iris.co.uk for the attention of personal tax if further clarification is required.

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