Jennifer Adams looks at the effect the coronavirus is having on some closed businesses.
The coronavirus lockdown has caused serious financial distress for many businesses. Unfortunately, some of those businesses that closed will never open again.
Terminal loss relief
Companies ceasing to trade and having losses in the final 12 months can generally claim terminal loss relief and obtain a refund of any corporation tax paid or deduction from any tax due.
Under this relief, losses are carried back up to three years prior to the date of cessation and offset against total profits of previous accounting periods on a ‘last in first out’ basis (i.e. the loss is carried back to the first accounting period before the loss-making period, then to the period before