In recognition of the difficulties that many businesses are facing due to the coronavirus pandemic, HMRC has updated its guidance on repayments of corporation tax and anticipated losses, stating that in exceptional circumstances claims for prior periods based on anticipated losses before the current accounting period has finished will be considered.
Included in HMRC’s updated Company Taxation Manual are details of what are considered to be exceptional cases for claims based on anticipated losses. It advises that although claims that are dependent on events in a subsequent accounting period that has not ended at the time of the claim are not usually accepted as valid, ‘Officers may, however, consider REG6 claims made before the end of AP2 in exceptional circumstances.’ The example given is where the expected allowable tax losses in the current period will be so great, they are ‘likely to comfortably exceed’ any income in the current period and any taxable profits of the previous period.
The guidance emphasises that any evidence a business submits in support of such a claim will be viewed strictly ‘as there will often be considerable doubt about the company’s profit position in future months.’
HMRC will review each case on its own merits but expect the Company to provide ‘full evidence to support such a claim’. This should include management accounts, profit and loss forecasts, draft tax computations together with the rationale and assumptions underpinning them.
We can provide assistance in preparing the information to support a claim or if you have any queries about corporation tax, please contact us, we’ll be pleased to help.
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