Is this trading?
Hollysan
Registered Posts: 68 Regular contributor ⭐
Hello all,
I have a client who, having gradually reduced her working hours, finally retired last year. However she still needs to fill in a tax return because she is a director and shareholder in a family business, although not active and not receiving a salary. The family firm had a bad year last year and so no dividends distributed.
However during the year she has started a new venture which involves producing one-off designs to clients' specifications. During the 2011 tax year she spent a few thousand pounds on expenses, mostly on materials and research, but received no income. It is little more than a hobby really, but she expects to receive some income from it, although the expenses may continue to produce a loss.
Does this constitude trading in the 2011 tax year? Or would it be better to include the expenses as set-up costs next year? I thought so, but she has had a website for over a year, so technically she has been actively marketing, although no income received. She will not have a tax liability either way.
I have looked at the guidance, but nothing quite definitive for this situation, so would welcome your opinions. Just can't make my mind up. Thanks for any thoughts...
Hollysan
I have a client who, having gradually reduced her working hours, finally retired last year. However she still needs to fill in a tax return because she is a director and shareholder in a family business, although not active and not receiving a salary. The family firm had a bad year last year and so no dividends distributed.
However during the year she has started a new venture which involves producing one-off designs to clients' specifications. During the 2011 tax year she spent a few thousand pounds on expenses, mostly on materials and research, but received no income. It is little more than a hobby really, but she expects to receive some income from it, although the expenses may continue to produce a loss.
Does this constitude trading in the 2011 tax year? Or would it be better to include the expenses as set-up costs next year? I thought so, but she has had a website for over a year, so technically she has been actively marketing, although no income received. She will not have a tax liability either way.
I have looked at the guidance, but nothing quite definitive for this situation, so would welcome your opinions. Just can't make my mind up. Thanks for any thoughts...
Hollysan
0
Comments
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1. on a comercial basis. 2. with a view to the relisation of a profit. see below
http://www.hmrc.gov.uk/manuals/bimmanual/BIM75705.htm0
