Corporation Tax Losses after Late Return

D

DB74

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Company A has Trading Loss of €16K and Case IV Income of €4K for a particular year.

Their CT return for that year is submitted over 2 months late

Does the Trading Loss have to be restricted by 50% first due to late submission before offset against the Case IV income or does the 50% restriction only apply when carrying CT losses back to a prior period.
 
Is this the relevant section you are looking for ?

Section 1085 TCA 1997 (a) says :-
"(a) any claim to offset loss relief (section 308(4)), or excess capital allowances (sections 396(2), 396A(3), 399(2)), which you may use to reduce the company profits of the current or preceding accounting periods is restricted to 50% of what it would otherwise have been,"
 
Remember, it's not a permanent denial of the loss, it's just a postponment by restriction on the amount of the loss that can be used for set-off or carry back. The amount of the loss that is restricted is itself still available for carry forward. Essentially, it can create a cash flow issue for the taxpayer in that they don't get the benefit of the loss at the right year but may do so in a future year.

I think we're all going to see a lot more computations with losses in them for the next while.
 
Question

I understand the losses are restricted to 50% if they are late. But, are they restricted to 50% of what is available of 50% of what would have been used if this restriction did not exist?

Lets say a company had 100,000 trading loss and would need to utilise 10k of that to shelter investment income.

Does the section restrict the 100,000 available to 50,000 in which there would still be plenty available. OR

Does it restrict the 10,000 which otherwise would have been used to 5,000?
 

It's restricted to 50% of the relief you would have claimed, so in your case it's restricted to 5k, as you would have been claiming relief of 10k. [broken link removed]

Stated most clearly here in Revenue's Notes for Guidance to the TCA ([broken link removed]):
"any claim for the chargeable period under [FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]section 308(4)[/FONT][/FONT], [FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]396(2) [/FONT][/FONT], [FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]section 396A(3)[/FONT][/FONT] or [FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]399(2) [/FONT][/FONT]is to be restricted so that the amount by which the company’s profits of the chargeable period or any other chargeable period are to be reduced by virtue of the claim is to be 50 per cent of the amount it would have been but for this section"
 
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