D J Macaulay

When the downturn started late 2008 many businesses noticed an immediate decline in their sales and profitability. For some the decline has only recently started to bite.

One of the tax concessions created in the last Budget was the ability for businesses to carry back losses three years – if this carry back reduced your tax bill in earlier years this claim could result in tax refunds!

Local accountants D J Macaulay Accountancy Ltd have come up with an interesting angle which might increase the amount of loss you can carry back. They comment:

“Whether you are subject to income tax or corporation tax you can presently set off losses made in specified two year periods against profits earned in the previous three years. There are limits on the amount of losses you can carry back but if the carry back effectively reduces your tax bill in an earlier year you will get a tax rebate. Interestingly the legislation allows you to use losses made in any accounting period ending in the two year period.

If you continue to use the same accounting date, obviously this will cover just two accounting periods. However in certain circumstances it may be possible to shorten a third accounting period and have this included as well. This may be useful for businesses that were late to be affected by recession. ”

D J Macaulay Accountancy Ltd would like readers to note that this strategy does not work for all firms, especially if you already have an end of March year end. However it's well worth getting this checked out. D J Macaulay Accountancy Ltd are happy to deal with your enquiries direct. Their contact details are printed at the end of this article.