Corporation Tax Act 2010 section 37

Relief for trade losses against total profits

Section 37 allows a company that makes a trading loss to claim relief by setting that loss against its total profits for the same period and, if desired, carrying it back to earlier periods.

• A company making a trading loss may claim to deduct it from total profits of the loss-making period and, if the claim requires, from total profits of accounting periods falling within the 12 months immediately before the loss-making period began.
• Losses must be relieved against the current period first; only the unrelieved balance may be carried back, and where multiple earlier periods are available the most recent is relieved first.
• No claim is available if the trade was carried on wholly outside the United Kingdom in the loss-making period, and carry-back into an earlier period is only permitted if the company carried on the trade in that period and not wholly outside the UK.
• The claim must be made within two years of the end of the loss-making period (or a longer period if HMRC allow), and where losses from different periods fall to be deducted in the same period, the earliest loss is deducted first.