Necessity of a return

Use of losses from a year that was outside the four-year time limit

The taxpayer was a German-incorporated wholly owned subsidiary of B a UK publishing company. It became UK resident after it was acquired by B in 2003 after which it was subject to corporation tax. It was unaware of its change of residence until 2010 when its adviser submitted an error or mistake claim under FA 1998 Sch 18 para 51. It filed tax returns for the periods 2004 to 2009 and a voluntary return for 2003. The company recorded losses for 2003 and 2004 which it claimed to set against future profits.

HMRC agreed that the company had become UK resident in 2003 but the losses could not be claimed because the returns for 2003 and 2004 were out of time. In essence the Revenue said the losses did not exist because the...