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Trading? NIL Return

burgburg Experienced MentorGloucesterModerator, FMAAT, AAT Licensed Accountant Posts: 1,441
I have a new client whom works within the building trade offering consultancy services. Over the past two years they have attempted to gain work by quoting for various contracts. Precious to this they were trading well and were VAT registered they have also remained so up until now.

During 06/07 they obviously made a loss, however the last return is a nil return but not stating cease of trade.

They had an intention to trade but have not been able to.

The question is how should I deal with this years return?

They have had VAT refunds throughout the year but have not had any income!

Should I repeat last year and submit a nil return?



  • deanshepherddeanshepherd Font Of All Knowledge Registered Posts: 1,809
    If they have had VAT refunds throughout the year then it cannot be a nil return. Presumably they have been incurring expenses?

    Depending on what your client wants to do with those losses will determine how interested HMRC will be in whether he really is still carry on in business with a view to profit.
  • burgburg Experienced Mentor GloucesterModerator, FMAAT, AAT Licensed Accountant Posts: 1,441
    Hi Dean

    I was pretty sure this was the case, the previous accountant should not have done a nil return?!

    Yes they have had VAT refunds. It is a partnership, total losses for year are aprox £900. Personal income for both partners is some employment and pensions, partner 1 £25k Partner 2 £15k

    From reading around if HMRC become interested then they may be looking at sideways loss reliefs? The onus will be on my client to prove that there was a 'reasonable view' of making a profit? Would written quotations suffice?

    Hopefully it won't attract too much attention!

    Thanks again Dean

  • deanshepherddeanshepherd Font Of All Knowledge Registered Posts: 1,809
    If the partnership is genuinely trying to make a profit then each partner should set their losses against other income to obtain a repayment of tax.

    This should also be done in 06/07 and you may want to consider submitting an amended return.

    If you think claiming a repayment is on shaky ground then you can always carry those losses forward to set against future profits of the partnership which is the very least the previous accountant should have suggested.
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