From 1 April 2017, there will be a substantial change to how corporation tax losses can be carried forward. These changes are intended to increase flexibility over the profits that carried forward losses can be relieved against. They are also intended to ensure that businesses pay tax in each accounting period that they make substantial profits, through placing a 50% restriction on future profits against which losses can be offset. While the increased flexibility will be welcome, there could be significant cash flow costs for larger businesses. For many businesses, the administrative burden of applying these complex new rules will be unwelcome.
