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Two businesses within a Ltd Company

Hi,

Client of mine set up a Ltd Company a year or so ago. During that time he worked exclusively on a golfing website business that as at today has incurred approx £20k of expenses but no income.

In year 2 he  has now taken up work as an IT contractor working through the same Ltd Company, with the golf business still operating in the background with the initention of this also bringing in income.

So, for year 1, I am proposing a set of dormant accounts (as no income) but am concerned as to what happens at end of year 2 - can we bring in the £20k plus of golf business expenses and offset against the IT income? Naturally this will lead to a large reduction in profits and hence CT.

Any advice is appreciated.

Matt

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05th Jul 2010 13:43

Dormant accounts?

Just because there is no income why are planning on submitting dormant accounts. The company was live and incurred expenditure. It is just a case that there was no income generated during that period.

Have you checked the expenditure to ensure none of it has a capital nature as based on what you are saying I take it your client has created a new website which they hope will make a profit in the future. Are there any capital allowances which you can disclaim and carry forward.

As has been commented you then have two seperate trades and you needs to be aware of the restrictions regarding setting the losses against income from another trade. principally if losses are carried forward they can only be set against future profits of the same trade.

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05th Jul 2010 15:13

Many thanks to the two of you for your advice - appreciated.

One final point, how do you account for 2 distinct trades within a set of company accounts and returns?

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