The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
When a company’s debits on its non-trading loan relationships and derivative contracts in an accounting period exceed the credits on its non-trading loan relationships and derivative contracts in the same period (the deficit period), the surplus is a special category of loss which is known as a non-trading deficit (NTD).
This guidance note considers how companies can utilise their NTDs.
For guidance on determining a company’s debits and credits from loan relationships and whether these are trading or non-trading, see the Taxation of loan relationships guidance note.
The reform of corporate losses within Finance (No 2) Act 2017 included a mixture of relaxations to the use of losses within the previous regime before 1 April 2017, and also a major restriction (50% for most companies) on the amount of profits that can be covered by the offset of most losses carried forward after 1 April 2017. For further details of the restriction on losses carried forward, see the Carried-forward losses restriction guidance note.
The rules applied with effect from 1 April 2017 and accounting periods straddling 1 April 2017 were treated as two separate accounting periods for the purposes of applying the rules.
HMRC issued guidance on 31 July 2017, which can be found here . This is a first tranche of guidance, focusing on the core rules and other aspects where guidance has been specifically requested. A second tranche of guidance was issued on 6 November 2017 and can be found here . The second tranche of guidance covers group relief for carried-forward losses and the relaxation of carried-forward non-trade losses. Further draft guidance on commencement provisions was issued on 7 December 2017.
Details of the changes in the utilisation of post April 2017 NTDs carried forward are detailed below.
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