Blogger
Share this content
0
11
1313

Can a newly incorporated business bring in a sole traders income/expenditure?

Hi,

If a sole trade operates from 5th April 2009 and incorporates the business on the 1st April 2010, instead of making a personal tax return for the sole trade business for the FY to April 10, can the company include the previous years income and expenditure in its April 10- March 11 accounts if this was meant to be within the confinds of the company but it was late in being incorporated?

Thanks,

steve

Replies

Please login or register to join the discussion.

avatar
05th Nov 2010 16:42

No

It's Friday afternoon. Sorry to keep it brief.

-- Kind regards Andy

Thanks (0)
avatar
By maxmadx
05th Nov 2010 16:45

I thought

you could use the previous 7 years of related expenditure in a newly formed company? 

 

I mean to say that the sole trader has not yet filed a tax return for the business to date.

Thanks (0)
avatar
05th Nov 2010 16:55

Still no

Grrrrr!

-- Kind regards Andy

Thanks (0)
avatar
By maxmadx
05th Nov 2010 18:43

ok

So what is the defining thing that allows a company to bring in previous trade within the 7 years rule?  If you buy goods/incur expenditure/income for 7 years- is that not the same thing?

Can you elaborate a bit?

 

steve

Thanks (0)
avatar
By maxmadx
05th Nov 2010 18:44

ok then, thanks for your detailed and helpful response Andy- wor

Thanks (0)
avatar
05th Nov 2010 19:25

A company

which exists and incurs expenditure in relation to a trading activity before the trade actually commences can claim for that expenditure when the trade actually starts. But this means

The company already existsTrade has not yet started, andThe company incurs the expenditure in relation to the future trade.

Sadly none of 1, 2 or 3 apply and to form a company later and try to rewrite history is telling porkies. Not a good idea at all.

Thanks (0)
avatar
By maxmadx
06th Nov 2010 09:09

ok thanks, understand now.

Thanks (0)
avatar
By vince8
06th Nov 2010 17:53

Baldrick

Think of another cunning plan?

Thanks (0)
avatar
14th Nov 2010 21:38

Wonders never cease ....
What professional qualification do you hold/ how many years experience do you have? I don't know if you should be preparing accounts etc if you don't know the answer to questions such ad this, or is it you business?

Thanks (0)
avatar
By maxmadx
14th Nov 2010 23:49

not yet!

Thanks (0)
avatar
By maxmadx
14th Nov 2010 23:52

ok

Sorry, but thanks for the "wonders will never cease" title I dont feel patronised at all! although maybe because the quesiton is that stupid I deserved it.

I am studying to be an accountant, but tax avoidance is a subject that fascinates me none the less.  I was reading about tax avoidance schemes and thought of the above scenario as a possible way to defer tax for a further year (albeit rather hastily without a lot of thought).  Some of the comments above have been really helpful from which I can clearly see where that idea falls apart. 

End of thread for me, thanks.

 

 

 

Thanks (0)