Loading Profile...
FAC incorrectly calculates an opening loss
I need to bring forward a loss from a previous year.
Under HMRC rules (http://www.hmrc.gov.uk/manuals/bimman...), I can carry forward a loss into the next trading year in order to offset the corporation tax liability for the current year.
However, if I enter a negative value in the opening balance profit box this figure is used as a retained profit and utilised AFTER current year CT liability has been calculated. My understanding is that if the opening balance for "profit" is a negative, this denotes a loss and hence this value should be deducted from the current operating profit in order to reduce CT.
Under HMRC rules (http://www.hmrc.gov.uk/manuals/bimman...), I can carry forward a loss into the next trading year in order to offset the corporation tax liability for the current year.
However, if I enter a negative value in the opening balance profit box this figure is used as a retained profit and utilised AFTER current year CT liability has been calculated. My understanding is that if the opening balance for "profit" is a negative, this denotes a loss and hence this value should be deducted from the current operating profit in order to reduce CT.
I’m confident
1
person has this problem
I have this problem, too!
Tell me when someone solves it.
The more people who report this problem, the more it gets noticed.
The more people who report this problem, the more it gets noticed.
-
Inappropriate?@Mike,
Be careful when you do this. There is almost always a difference between an "accounts loss" and a "tax loss".
You should enter the "accounts loss" (which is the minus figure on last year's balance sheet shown as Profit & Loss") in FAC.
I'll tell you how to deal with the tax loss later today when I have a minute.
I’m happy because the sun is out in Kendal.
1 Comment
Add a comment
This solves the problem
-
@Stuart,
Thanks for replying to this. I really appreciate it. I'm looking forward to your accounting genius shortly :)
Warm Regards,
Mike -
Inappropriate?Mike,
We just need to get our heads around the rules on carried-forward losses. Once we've done that we should be able to handle this situation.
I’m confident
-
Inappropriate?Hi Ed,
Thanks for this. I'm not sure I'm 100% clear on the rules either, I'll wait for Stuart to put his 2p in to clear it all up :)
Cheers,
Mike
I’m confident
-
Inappropriate?Don't forget :)
-
Inappropriate?Mike, fear not, we're in quiet contemplation of this very issue at the moment. What we may do is allow you to manually enter a 'tax loss brought forward' for that first CT return...
-
Inappropriate?Mike,
Just to reassure you we haven't forgotten about you - we're planning to put the facility to handle an opening tax loss (together with such exciting things as an opening corporation tax capital allowance asset pool value!) in next weeks release 'Orvieto'.
I’m confident we'll get you there. But then again, so was British Rail.
2 Comments Add a comment
This solves the problem
-
Cheers Ed :)
-
Just replied in the main thread
-
Inappropriate?Hi Ed,
I've just taken a look at the profit and loss and I notice that the retained loss from a previous year does not yet offset the CT liability as it should.
A retained loss carried forward is currently working identically to the way in which the retained profit works. In other words, it's just added to the amount redistributable at the end (rather than the beginning).
Any idea when this will be fixed? I'm coming up to my first year end in a couple of months and FAC is currently reporting the wrong CT liability (which always worries me when I think how much I'll be overpaying!!).
All the best!
Mike
edit: I notice that I can edit the opening CT liability. However I only know my retained loss. How can I calculate the opening negative CT liability?
I’m confident
1 Comment Add a comment
This solves the problem
-
Hi Mike
Ed isn't in the office until Monday and I think it's best he replies to this, so it might take a few days to get a reply. Just so you know! -
Inappropriate?Thanks Olly, no rush. It's good to enjoy a holiday now and again!
I'm looking at the Corporation Tax return inside FreeAgent. The line: "less brought forward trading losses" is showing £0.00, when it should really have a value there to offset the CT from this year's profits.
Come on FreeAgent; help me get the CT figure right back down to it's proper level :)
I’m waiting for my chance to go on holiday. Anyone volunteer to cover for me?
-
Inappropriate?Mike,
You really are needing a 'tax loss brought forward' number to enter in this case. Because of capital allowance rules and the fact that some expenses are disallowed for tax, it's almost certain to be different from your P&L opening loss.
Won't you (or your accountant) have the number from the previous CT return you submitted? If not, using the same number will at least get you in the right ballpark especially if you haven't claimed that much in capital allowances.
Any advice, Stuart? -
Inappropriate?According to the Employer Expense and Benefits manual on HMRC's website, it is possible to use a previous year's losses to offset the current P&L for calculation of CT. The manual doesn't appear to make a distinction between "tax loss" and "P&L loss". I don't have a link to the source handy; although it can be easily found @ HMRC online.
Regarding accountants; I left my previous accountant last year because they enforced spreadsheet hell and I had to wait several months for the end of year which caused some problems, hence I found FAC to perform the bookkeeping and accounts preparation functions.
I'm not sure what number you mean from the previous CT return. I'll ask my previous accountant, although it may be a long time until I get a reply from them... *sigh*
Best,
Mike
p.s. I'm in the market for a new accountant; I'll take a look at the FAC-friendly list.
EMPLOYEE
