Melissa Geiger, Head of International Tax and Tax Policy for KPMG UK, comments on Tuesday’s announcement by HMRC.
Melissa Geiger, Head of International Tax and Tax Policy for KPMG UK, comments on Tuesday’s announcement by HMRC: “As a reaction to COVID-19, HMRC has published updated guidance confirming that in exceptional circumstances, it will consider corporation tax repayment claims for previous periods. Claims will take into account an anticipated carry back of excess trading losses from the current period into a previous period. This is a significant and welcome development for heavily loss-making companies in FY20 who were profitable in FY19.
“The change means that HMRC could consider repayment claims as long as there are ‘exceptional circumstances’. Our understanding is that ‘exceptional circumstances’ means that a company must have evidence to suggest the trade losses in the current accounting period are likely to be so large that they will comfortably exceed any other relevant income in the current accounting period. This will give rise to an amount available to carry back to the prior period.
“Businesses should be aware, however, that this does not mean that all claims will be accepted. They will be reviewed carefully by HMRC on a case by case basis and HMRC have said companies will need to provide ‘full evidence’ to support any claims.”
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