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Where Taxpayers and Advisers Meet

Carrying forward a loss

Posts: 2
Joined: Wed Apr 06, 2016 8:52 am

Carrying forward a loss

Postby madengineer » Wed Apr 06, 2016 9:01 am

Hi, I am registered for SA and have completed tax returns before, I also have a 'main' job and pay income tax through PAYE. I'm SA registered for freelance work that I do on the site (never been more than £5k per year though)

I took a bit of a break from trading and started trading again in February 2016, however for the tax year 15/16 I will have made a loss as the project that I started work on in February hasn't yet been invoiced, the invoice will made at the end of April 2016.
So when I complete my SA for 2015/2016 is there a way that I can carry forward the loss into 16/17 so that I don't have to faff around with tax codes or tax rebates?

Posts: 924
Joined: Wed Aug 06, 2008 3:28 pm
Location: Loughborough

Re: Carrying forward a loss

Postby jpcentral » Wed Apr 06, 2016 12:47 pm

Just because you haven't invoiced the work doesn't mean that it shouldn't appear in your accounts. In accrual (standard) accounting a WIP (Work in Progress) figure would be included to show work which has been carried out but not yet invoiced.

If your WIP figure is equal to your calculated loss, the net effect will be to carry the loss forward to next year because the WIP will appear next year as Cost of Goods Sold.

Should there actually be a loss, there are various ways of claiming loss relief (sideways, carry forward and carry back). You would need to decide on the most appropriate for you.

Obviously the above is a simplification so suggest you take advice.
John Perry
Central Business Services

Posts: 2
Joined: Wed Apr 06, 2016 8:52 am

Re: Carrying forward a loss

Postby madengineer » Wed Apr 06, 2016 1:34 pm

Thanks John,
I had forgotten about the WIP part of the return.

Posts: 3168
Joined: Sat Feb 01, 2014 3:26 pm

Re: Carrying forward a loss

Postby bd6759 » Wed Apr 06, 2016 10:58 pm

Or use the cash basis?

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