Corporation tax loss relief: CILR and the deductions allowance

Since April 2017 a company’s ability to use carry forward (income) losses to offset future profits has been subject to a loss restriction. In summary the corporate income loss restriction (CILR) works to restrict carry forward loss use to 50% of a company’s taxable profits. However it is not as straightforward as that. Calculating the loss restriction is complicated. First with the 2017 loss reforms creating three categories of carry forward (income) losses a company may have to apply three restrictions. There are then a number of steps that must be taken to ensure each restriction applies to the ‘correct’ profits. Finally there is the deductions allowance to take into account: designed to give companies (or groups) use of up to £5m carry forward losses without restriction it brings with it a whole raft of new compliance obligations at both group...