Home For accounting professionals General accounting discussion
Current updates regarding coronavirus (Covid-19) and the precautions AAT are taking will be continually updated on the below page.

Please check this link for the latest updates:
We hope you are all safe and well and if you need us we will be here. 💚


Offsetting loss against other income

A sole trader client uses cash basis accounting and has made a loss in the first year. Client is also employed and is a higher rate tax payer. Can the loss be taken into account against the income from employment or should the loss be carried forward against potential future profits?

Comments

  • burgburg Experienced Mentor GloucesterModerator, FMAAT, AAT Licensed Accountant Posts: 1,441
    AS the cash basis has been used then sideways relief is not available. Losses can only be carried forward for reief against profits from the same trade. A check should be made to see if preparing the accounts on an accruals basis may be better for the client as then sideways relief would be available.
    Regards,

    Burg
    MarieNoelleDonna Curling
  • stevo5678stevo5678 Well-Known Cheltenham Registered Posts: 325
    If the stock is not that much nor the debtors/prepayments etc then as Burg says using an accruals basis may make sense to use the loss.
Sign In or Register to comment.