Pre-Budget Report 2008: BDO reacts to measures to assist small and medium sized businesses

In today's Pre-Budget Report, it has been announced that all companies and unincorporated businesses making losses from carrying on trades, professions or vocations can carry back those trading losses against available profits of the three preceding years to get a repayment of tax. 

The measure will have effect for company accounting periods ending in the period 24 November 2008 to 23 November 2009. For unincorporated businesses, the measure will have effect in relation to trading losses for tax year 2008-09. After carry back to the preceding year, a maximum of £50,000 of the balance of unused losses is then available for carry back to the earlier two years.  HMRC will make repayments arising from loss relief claims received under the new rules on or after Budget Day 2009.

Stephen Herring, Senior Tax Partner BDO LLP, comments:

"This is a useful measure that will bring much needed relief to small businesses but it is a shame that it is not a permanent change.  When taken together with the other outlined measures to assist smaller businesses to spread their payments, the overall package is to be welcomed.  However, it is to be noted that these measures are temporary and somewhat piecemeal and arbitrary so that some businesses could miss out, for example, if a small company has made losses in its accounting period to 31 October 2008.  The benefit is also quite limited as the cash repayment is limited to an effective maximum of approximately £10,000. The Chancellor could have afforded to be much more generous in this area in light of a fiscal stimulus package costing £20 billion."

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For more information, please contact Matthew Longbottom at BDO on 020 7893 2717, 0797 619 8786.

Notes to editors:

BDO LLP operates across the UK with over 3,000 partners and staff. BDO LLP is a UK limited liability partnership and the UK Member Firm of BDO International. BDO International is a world-wide network of public accounting firms, called BDO Member Firms, serving international clients. Each BDO Member Firm is an independent legal entity in its own country. The Belfast Firm is operated by a separate Partnership.

BDO LLP and BDO - Belfast are both authorised and regulated by the Financial Services Authority to conduct investment business.

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