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Separate trade?

Client trades as self-employed providing services in the tv industry. She then sets up limited company as she wants to start an employment agency; incurs various costs specific to employment agency (eg. website). But trade as employment agency never commences.

For 6 months (to avoid IR35 I think) she trades thru the ltd company rather than under self-employment. She takes wages at NI threshold and rest as divs.

Does the provision of her services fall under the employment agency trade (making the website costs, etc allowable for tax) or is it a separate trade?

My feeling is it's a separate trade. Client, of course, hoping otherwise!


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Yes - it is a seperate trade - and there is also the issue that the trade never really commenced.


However, a loss of one trade can be offset against another trade - hence she should get relief in the same acccounting period. But, of course, she cannot carry this loss forward against the Tv industry income.


My worry would be if HMRC would argue that the trade never commended, in which case the loss may be blocked altogether.

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By Lucy J
08th Aug 2012 16:17

My intention is to c/fwd the pre-trading exps to set off against the employment agency if and when it ever commences (if it's a separate trade) as pre-trading exps are treated as occuring on the first day of trade, so no loss yet established.

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I do not see a problem with that!!


Good idea

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08th Aug 2012 15:53


I'm not 100% convinced it is a separate trade, but as mawallace has pointed out, there is a problem with whether the first trade was ever a trade in the first place (since it did not commence).  Pre-trading expenditure is treated as incurred on the first day that the trade is carried on, but pre-trading expenditure of the first 'trade' cannot in my view be treated as pre-trading expenditure of the second trade.

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