The CIOT is urging the government to provide timely relief for losses suffered by companies in the pandemic period, similar to that used in the past to keep more businesses afloat in an economic crisis.
Currently, if a company or organisation is liable for corporation tax and makes a loss from trading, they can set that loss against profits in the previous 12-month accounting period, reducing their corporation tax bill for that period (and if the tax has already been paid, earning a refund).
The CIOT (Chartered Institute of Taxation) is proposing that this ‘carry back period’ be extended to three years as a short-term measure to help businesses impacted by the pandemic.
This would give a cash flow boost to businesses with a track record of paying tax because they will be able to claim a refund of corporation tax paid in the previous three years.
Thinking of appointing Dolan Accountancy?
Give us a call on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.
Email JaimeAdrian Rudd, Chair of the CIOT’s Corporate Taxes Committee, said, “A three year carry back of business tax losses arising over the period of the pandemic would give businesses with a track record of making profits and paying tax, but which have suffered over the last year, a much-needed cash injection.
“There is precedent for such a measure during previous times of severe economic downturns. Similar measures were implemented in the recession around 1990 and, again (though on a more limited basis), in 2009 in response to the financial crash of 2008.”
To find out more about contracting please contact Jaime on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com