As part of the July Stimulus package recently announced, companies incurring losses in 2020 may be able to make a claim to elect for 50% of the estimated losses to be allocated against prior profits, thereby resulting in a tax refund or a reduction in the level of corporation tax being paid.

To avail of this scheme, a company will need to be satisfied that it expects to incur a loss in an accounting period which includes some or all of the period commencing on the 1st of March 2020 and ending on the 31st of December 2020.

The company should estimate the amount of the expected loss and keep detailed calculations as to how the estimate was arrived at.  The company can then make a claim to Revenue to have 50% of the estimated loss set off against the previous period’s corporation tax liability. 

The claim to Revenue can be made as early as 4 months from the beginning of the loss-making period and up to 5 months after the end of the period.  Companies can therefore potentially receive 50% of their corporation tax refund during the loss-making period, rather than waiting until the accounts had been completed and corporation tax return for the loss-making period submitted to Revenue before a loss claim could be submitted.

To be eligible to make a claim the company must be fully tax compliant. Where a company has entered into a debt warehousing agreement or a payment arrangement with Revenue it will be considered tax compliant.

If you believe that the above may be of benefit to your company, please do not hesitate to contact a member of the tax team at 01 677 9000 or by email at info@cooneycarey.ie

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