Normally a Company can carry back a loss against its previous year. The budget announced a temporary extension to allow losses to be carried back up to three years. This can trigger a refund of tax paid in these previous years.
In detail, Companies having accounting periods ending between April 2020 and 31 March 2022 can carry back any losses in these accounts against profits up to three years back (capped at £2m).
This also applies to sole traders and partnerships. Trading losses declared in their 2020/21 or 2021/22 tax return can be offset against profits made in the previous 3 years.
As expected, offsets must be made against the most recent year first and must relate to the same trade.