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Accounting T

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Terminal loss

Terminal loss

A taxation term referring to a business loss which cannot be carried forward in the normal way, because the business is closing down or being wound up. If no other relief is available, e.g. there is no other source of income against which the loss can be set off in that year, then the Inland Revenue may allow the loss in the ultimate year to be ‘carried back’, i.e. reclaimed against profits of prior years. Terminal losses cannot be carried back more than three years.

Reference: The Penguin Business Dictionary, 3rd edt.