This group allows you to indicate how tax relief is handled.
Tax Relief Regime
A choice of four different models for handling tax relief:
None: the Tax Rate is only applied to positive Pre-Tax Profit when calculating the Tax Charge, and no tax relief is available.
Immediate: the Tax Rate is applied to Pre-Tax Profit, even if negative, in which case there will be a negative Tax Charge. Such a charge – corresponding to a credit from the government – may be appropriate where the model represents only part of the organisation’s operations, and losses in the operation being modelled can be offset for tax purposes against profits in other operations.
Limited: losses are accumulated in years when Pre-Tax Profit is negative, for a maximum number of years specified by the input Tax Relief Years. In years when Pre-Tax Profit is positive, any remaining losses are offset against tax, starting with the oldest. A Tax Charge is only levied once all relief is exhausted.
Unlimited: losses are accumulated indefinitely when Pre-Tax Profit is negative, and offset against tax when Pre-Tax Profit is positive, as above.
Default: None.
Tax Relief Years
The maximum number of years for which losses can be accumulated when limited tax relief is available (i.e., input Tax Relief Regime =
Limited).
Note: Tax relief is implemented as a series of derived results, supporting limited accumulation of losses for up to five years or unlimited accumulation indefinitely. If you need to accumulate losses for more than five years for limited tax relief, it is fairly straightforward to define the necessary additional results – see 5.17 Defining results.
Note: Only values in a period, governed by the input Tax Relief Years, up to and including year –1 will affect the calculations, even if the input Tax Relief Regime = Unlimited.
Default: 5. Any remaining loss from more than five years ago is discarded.
Prior Annual Loss
Losses carried forward from the years immediately before the start of the model, used to calculate the initial tax relief available if the network makes a profit in the early years of the model run. Only values in a period, governed by the input Tax Relief Years, up to and including year –1 will affect the calculations, even if the input Tax Relief Regime =
Unlimited. For example, with Tax Relief Years = 5
and Prior Annual Loss = Constant {100.0}, the total accumulated losses available in year zero will be 500. Ignoring the actual profit or loss in the following years, this relief will reduce by 100 each subsequent year if Tax Relief Regime =
Limited, whereas with Unlimited it will remain at 500.
Default: Constant {0.0}.