HOW DO I CARRY OVER LOSSES?

I appreciate that there are losses.

With lots of debt around would it be worth letting me have a look at its viability or sign post efficiencies?

Anyhow, send me a ll the figures and i will let you know how to proceed with the losses.

Possible tax repayments not payments.

Regards Richard

Have you been putting the losses on your returns?

Have you claimed the losses against other income or previous employment income?

Why do you consider it better to go bust and lose your business then to pay someone to sort you out? That really makes no sense.

You have to specify, on the self employment pages, what you want to do with the loss each year.

The s/e pages will calcualte the loss you have made.

You then have to say if you want to allocate it to other income of this year, carry forward to next year, or use a loss brought forward against this year's profits.

I appreciate that money is tight, but an accountant would charge a fraction of the tax bill you're facing - giving you the peace of mind that it's all under control. They might also find expenses you haven't thought of.

The tax losses rules can be complex so again, it's important that they are applied correctly.

You say you pay tax on other income, well if you can do the sums then get the right pages of the return right you may claim some of the loss against your other income, but don't claim too much as you may over claim and lose out. Now this is where you really do need a tax adviser or an accountant....qualified! There are many out there who 'give' advice but have little to back up their status, so do be careful.

You could get help via Taxaid if you really can't afford to pay, but if the bsuiness is so poor why are you carrying on?

Good Luck

sue

Your post really worried me. I understand that you are in a financially difficult situation but I do not think you really understand how an Accountant can help you, nor do you seem to understand what you are letting yourself in for by doing it yourself. If you do not know how to use previous years losses or have not even bought a tax/accounts book to try to fathom it out then I would be most concerned as to whether you really know how to do your own accounts/tax returns.

The new penalty regime introduced this year is really harsh and I understand that a lot of the current tax enquiries/investigations are being directed at people like yourself who do their own tax returns. Frankly it is easy pickings. Every single job I have reviewed when a client has prepared their own accounts prior to coming to me has been wrong or at best the client has not made use of the tax advantages. You are certainly not saving yourself any stress by doing it yourself just storing up worries and probably penalties for the future. 

Do you know what your personal allowances are, do you know what Capital Allowances and Annual Investment Allowances are? Have you used them in your calculations? Do you really know what you can and cannot claim for? You don't actually give much information in your post but I doubt it from what you do say and that is why you have received the answers you have. Most of us will try to help a small trader out if the facts are there but you are adding complications with losses and they do need a more considered opinion with all the facts to hand. There are, for example, a number of options for using losses and you are probably already too late to use some of them (need to check my dates). Your other income also complicates things as you do not say whether you have any allowances available for set off against your self employment and that could be one reason why your bill is so high. I have a new client coming in tomorrow and it took about two minutes on the telephone to established that she has actually put her income down twice in different parts of the return. The Revenue software has taken account of both lots of income because it has been told to by teh tax payer not understanding what should go where.

Don't expect HMRC to correct your return for you even if there are obvious mistakes, especially if it would be to your advantage, but you should be concerned that returning sufficient profits to incur a £5,000 bill this year when you showed losses last year could give them justification to start an enquiry unless there is an obviously good reason for it. They will want an explanation and if you cannot provide it that is where your extortionate Accountancy bills come in not from preparing the figures (if you go to the right Accountant and I agree with previous posts that you do need to be careful). If you go to an interview at the Tax Office without an Accountant to help you could really end up in trouble. From the sounds of things I do not think you know enough about it to handle a reply to an Inland Revenue enquiry let alone a full blown interview. I have only been to two in my lifetime as I prefer clients not to get in that position but I can tell you that HMRC are VERY well trained. An individual does not stand much chance on their own.  

IF you really want to stick your head in the sand and just offset the losses you could probably just get away with writing a letter to HMRC asking them to offset all of the previous year's losses against the current year's profits when you have submitted the current Tax Return. (I am assuming it is 2010 Tax Return that is causing you problems). I hope you are not thinking £5,000 of losses from previous years will wipe out a tax bill of £5,000. Assuming your tax liability of £5,000 is based on taxable profits of £25,000 at 20% (if you have used up all P A's in employment) you will need losses of £25,000 from earlier years to wipe it out. All of this assumes that you did actually show the losses on the tax returns you have submitted. If you have not claimed them previously you need to hurry and do it before end October.

The idea of you writing off a decent business and being left with debt, particularly the borrowing against the house makes me shudder so if you want to contact me I would like to ask you a few questions, maybe have a look at your previous returns and see if I can help you get something sorted. I could at least talk you through your options. Don't worry, I give all clients a free first interview so this would not be any different. If you click on my details I think you can email me or send a private message. Please add a landline phone number if possible.

Hello Mr. Trader,

First of all, i don't think you have losses otherwise you'll not be able to carry on until this year. I'm afraid what you have were mispresentation of accounting right from the very start. My advise is to get a friend of yours who has knowledge in accounting and ask for a little help. As you've mentioned, It is a shame to wind up the business when it is showing considerable growth.

Tess

 Of course she can continue to trade when she is showing losses. The detail is in the original post. The poor girl has borrowed from a number of sources to get to this stage. She has backed her own instincts and it looks as though she might be turning things around this year. Unfortunately she clearly had not bargained for such a big tax bill and that is what she is asking for help about. Many business's take up to 5 years to start producing a profit. It takes time to get known if you start from scratch. 

The main point is that she is still in time, just, to correct everything and probably obtain more tax relief than she thinks she can.