Business with two premises one not started trading

Business with two premises one not started trading

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I have a client who operates two hotels, one of which he has recently purchased and is not yet open for business.

hotel 1 = trading
hotel 2 = not yet trading

I have prepared amalgamated accounts because his records are merged together and he uses only one bank account and one VAT registration.

two items that cause issue. expenses and mortgage interest identified as relating to the hotel2. can these be put through this year's P&L (and claimed against tax) where hotel2 hasn't yet produced any income? I appreciate that some expenses (ie repairs) will be disallowed if it can be seen that they were needed to bring hotel2 into a condition ready for trading. I am concerned that these expenses are being offset against hotel1's income and that this may not be in line with accounting standards.

Questions:
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- should I keep accounts and tax comps separate for these two hotels or is it feasible to amalgamate?

- what is reader's opinion of the pre-trading expenses of hotel2? can these be charged to the current year's (amalgamated) P&L? can capital allowances be claimed too?

thanks for readers' assistance.
SHALL

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By AnonymousUser
10th Oct 2006 19:08

One trade or two?
The answer to your question lies in whether as a matter of fact he carries on one trade or two. It is probably arguable either way (unless one hotel is 5 star one and the other little more than a doss house). Factors which would point to one trade would be matters such as common branding of the hotels, similar client base (would you go to one having been to the other) or general commercial interdependence eg in terms of staff, maybe if in same town referring guests between the two and so on (obviously hypothetical at this stage but he may have intentions which point one way or the other).

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