Revenue Note for Guidance

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Revenue Note for Guidance

396D Accelerated loss relief for certain accounting periods


This section provides for a temporary acceleration of corporation tax loss relief for tax compliant companies who have incurred or reasonably expect to incur trading losses in accounting periods that include some or all of the period from 1 March 2020 to 31 December 2020 (specified accounting periods). A company may make a claim (an interim claim) to carry back up to 50% of its estimated trading loss for the specified accounting period against its profits of the preceding accounting period. An interim claim may be made as early as 4 months after the beginning of the specified accounting period and up to 5 months after the end of the specified accounting period. A company can revise its interim claim as the specified accounting period progresses (and up to 5 months after its end), including increasing its interim claim where the company estimates that its trading loss for the specified accounting period will be greater than the amount included in an earlier interim claim.

To be eligible to make an interim claim, a company must file (or have filed) a tax return for the preceding accounting period as well as being generally tax compliant. The company will also be required to make a declaration that it has incurred, or it will reasonably expect to incur, a loss in the specified accounting period.

The maximum amount of the estimated loss which qualifies for early carry-back is 50 per cent. The remaining loss, when properly quantified in final accounts prepared after the end of the specified period, will qualify for carry-back in due course under the normal rules.

Relevant Date: Finance Act 2021