Loss spread in PBR a disappointment for advisers

Bill Dodwell. tax partner at Deloitte

Bill Dodwell. tax partner at Deloitte

Measures to allow businesses to spread losses over three years instead of one
have been met with disappointment from tax advisers.

They believe that the chancellor could have allowed unlimited losses to be
carried back instead of just the £50,000 announced in the pre-Budget report.

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

The government calculates that the loss carry back will save business £10m
this year, £17.5m in the year after, and then £20m in 2010/11. The government
believes it will begin taking extra revenues of £15m the following year.

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

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

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

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