Corporation tax trading losses are the ‘bread and butter’ of tax exams and by mastering losses you can pick up easy marks.
The trading loss must first be offset against the total income before qualifying charitable donations in the current year. This claim is an all-or-nothing claim and will result in the QCDs being wasted. (If you don’t use you lose it, like your muscles!)
After claiming loss relief in the current year, the loss can then be carried back 12 months and offset against the total income before qualifying charitable donations. Once again it is an all-or-nothing claim.
Any remaining loss can then be carried forward against the future total income of the company. The disadvantage here is that tax relief is given in the future.
The trading loss can also be surrendered to other companies in the same 75% loss group (strict 75% shareholding and UK resident companies only).
Remember when you give group relief, you are permitted to give any amount.
Once you have understood the rules above, have a go at Janus Group part A which is Q66 in the Kaplan exam kit
If you are planning on doing Tax or Advanced Tax in June, I recommend you learn trading losses. Why not memorize the memory-joggers in my condensed notes and then start smashing through exam questions?