A loss carry-back mechanism enables a business to offset a loss in a particular tax year against a profit in a previous year, and receive a refund of the tax paid in the previous profitable year.

The proposed mechanism will provide cash to businesses that are, or anticipate being, in loss.  A temporary mechanism will be included in a bill introduced the week of the 27th of April.

Between now and then Inland Revenue will be undertaking targeted consultation with tax advisors to make the law and administrative guidance as clear as possible.

The loss carry-back rules apply to ALL businesses whether trading individually or through a company.

You will be able to estimate your March 2020 provisional tax based on an estimated March 2021 loss. You do not have to wait until the 2021 Accounts are finalised to access the losses.  If you think there’s going to be a loss, you can include a reasonable estimate of that in your 2020 calculations.

Just be aware that if you get it wrong, use of money interest will still apply (a new rate will be announced soon).