PBR 08: Experts warn of lost opportunity on company losses

Government measures to allow businesses to spread losses over three years
instead of just one, has met with disappointment from tax advisers who say the
chancellor could have gone much further and allowed unlimited losses to be
carried back instead of just £50,000 announced in the pre Budget Report.

Jonathan Hornby, senior director corporate at Alvarez & Marsal Taxand,
said: ‘It’s a welcome measure but the chancellor could have gone further to help
small businesses.

‘It would have been more helpful to small business to not limit the amount of
losses that can be carried back.’

The government calculates that the loss carry back will save business £10m
this year and then £175m in the year after.

Against the sums supposedly saved by deferring the rise in small business
corporation tax – half a billion – the sum looks insignificant.

‘Disppointment on the loss carry back rules. It only applies to losses up to
£50,000. There’s lots of companies in business with bigger losses than that.
We’ll see people pushing for more than that,’ said Bill Dodwell, tax partner at

The loss carry back measures was originally three years before Labour came to
power but was changed in 1997.

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