Hi Tina Bishop,
Sorry, but as we do not have your full details we can only provide a general answer.
But based on what you have has been said, there appears to be farming trade profit of £170k in 21/22 and a loss from the same farming trade in 22/23 of £200k.
We are assuming there is no other income in either year.
Agent has made a 2 year farming profits averaging election for these years which has the effect of spreading £85k profit forward from 21/22 to 22/23 (losses are treated as nil for the purposes of calculating the averaging profits election only).
The way that the spreading works means that whilst we now have a profit of £85k chargeable to tax in 22/23, the whole amount of the farm trade loss from 22/23 of £200K can be utilised using the normal available trade loss rules:
BIM85000 - Trade losses: contents
What the agent is then asking is if they can c/b £85k loss under S64 2(b) (BIM85015) against the general income (which is the remaining £85k farming profit) of 21/22 and then set £85k against general income (which is the spread forward farming profit) of 22/23 under S64 2(a).
This would then leave £30k loss available to carry forward from 22/23 against next available same trade profits under S83.
The query is whether the losses set against 21/22 and 22/23 would be limited to £50K each year due to the loss restriction rules.
The rules for the restricted loss relief are in the Helpsheet HS204 which will be good to refer the agent to:
Limit on Income Tax reliefs (Self Assessment helpsheet HS204)
Loss relief set against general income of a year is restricted to £50k or 25% of the adjusted total income of the year if higher, however, one of the exceptions to this (section 2.3 of the helpsheet) is where the loss is set against profits of the same trade.
This is also covered at BIM85703 which says: 'The cap does not apply to trade losses so far as they are relieved against profits of the same trade.
BIM85703 - Trade losses - restriction of relief: interaction with the income tax reliefs cap