In his March 2021 Budget, the Chancellor announced a temporary extension to the carry back of losses from 12 months to three years for trade losses incurred in respect of accounting periods ending between 1 April 2020 and 31 March 2022 for companies. A similar extension is available for unincorporated businesses. HMRC has recently updated their guidance which now provides further details on claims for the extended loss carry back by companies.

Extended loss carry back claims must generally be made in a corporation tax return. However, claims for amounts below a de minimis limit of £200,000 can be made outside a return.

If the claim must be in an amended company tax return, this does not need to be submitted online as the 12-month time limit for making amendments may have lapsed meaning the submission of the online amended return would be rejected.

Where a de minimis claim is made outside of the company tax return, a letter containing the relevant details should be sent to the company’s usual HMRC address for corporation tax.

Claims by companies for extended loss carry-back should not be made until Finance Bill 2021 receives Royal Assent. This is expected to take place mid-July 2021.