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Need Clarification Please?

shaxxashaxxa Feels At HomeRegistered Posts: 82
Hi everyone,
A happy new year to you!
Wondered if I can pick your brains please?
My client is a self employed consultant who bought a magazine title with the intention of publishing but this has never happened.
The title is relevant to the consultancy work but my client is now asking can this cost be written off as an unsucessful venture as publishing will not happen?
I'm only completing a tax return, he does not require accounts so therefore does not have a balance sheet.
I think I should just put it through as business expenses but my client may be confusing the issue by asking the question of writing it off?
Any thoughts on this would be much appreciated.
Only the 3rd January and brain dead already!!!:confused1::confused1::confused1:



  • DeanDean Experienced Mentor DevonRegistered Posts: 646
    'Writing it off' and 'expense' is essentially the same thing.

    The problem you have is, (and as I see it) the transaction initally is captial in nature - the cost would have been capitalised in the new venture's balance sheet and then relievable when the new business was sold. As it stands my gut reation is that the 'cost/expense' is that of a dead one. Sorry, I guess this wasn't the answer you wanted!


  • shaxxashaxxa Feels At Home Registered Posts: 82
    Thanks Dean.
    It's not the answer my client would like! :thumbdown:
    I thought it unlikely I could get away with it as an expense.
    How's the ATT going? Have you finished now?

  • peugeotpeugeot Experienced Mentor Registered Posts: 624
    That is what my understanding of it is also. I had a client who bought a franchise (though I didn't feel sorry for this client in the slightest - just went out and bought it, no advice sought). The Revenue's (harsh) view is why should we be out of pocket by virtue of tax relief for a venture which is doomed to failure. It's a risk they take.

    Double check with HMRC Shaxxa as there could be something he could get back, though I doubt it.

    Best wishes
  • DeanDean Experienced Mentor DevonRegistered Posts: 646
    shaxxa wrote: »
    How's the ATT going?

    Took my finals in November and they seriously stepped up another gear this sitting to the May sitting! Fingers tightly crossed!
    Have you finished now?

    We shall see come results day :001_unsure:


  • shaxxashaxxa Feels At Home Registered Posts: 82
    Thanks Steve, I will give them a call tomorrow.

    Fingers crossed :thumbup:
    I still haven't got passed paper 1 yet but at least I've got to May, but will have to get my fingers out as I want to do the law paper at the same time!
    There's always February & March for study time :001_smile:

  • DeanDean Experienced Mentor DevonRegistered Posts: 646
    Hi Sharon

    There is no separate law paper. That is the old syllabus. Paper 1 will include all aspects of personal tax, law and ethics! There is still plenty of time but don't just concentrate on the personal tax element for the paper 1 exam - you will be sure to fail if you do. Each exam is now 3hrs each as opposed to 1.5hrs. They also include an additional 25% content compared with the old.

    Freightening - I know! :laugh:


  • JodieRJodieR Experienced Mentor Registered Posts: 1,002
    back to the original question...
    I agree with what was said about the cost being capital as opposed to revenue in nature and therefore you won't be able to claim it as an expense, however I think that you have a 'deemed disposal' here which will create a capital loss. Now it's a long time since I learned about capital losses but I think I'm right in saying that it can just be carried forward until such time that a capital gain is made and then the gain is reduced accordingly. I suppose it depends on whether you expect your client to ever be subject to CGT as to whether it's worth it. Might be worth looking into though.

  • peugeotpeugeot Experienced Mentor Registered Posts: 624
    It could be a capital loss and there are ways in which capital losses can be offset against other income provided certain conditions are met (normally capital losses are c/fwd against future capital gains). However (as is always the case in these matters) these areas of tax are incredibly complex hence my advising Shaxxa to contact HMRC to discuss the various ways in which tax relief MAY be granted.

    Best regards
  • shaxxashaxxa Feels At Home Registered Posts: 82
    Spoke to HMRC, they have said it can be claimed as an expense under box 3.57 as advertising and promotion, reason being as this is a publication right which has been incurred wholly & exclusively for my clients self employment.
    Still not so sure, but feel I have sufficient cause to argue the case if necessary.

    Thanks for all your thoughts and input.

  • peugeotpeugeot Experienced Mentor Registered Posts: 624
    Hmmm, very interesting.

    Maybe the Revenue are feeling generous towards taxpayers following their recent bad press!!
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