Income Tax Losses Carried Forward
My client is a self-employed hairdresser and beautician who traded in partnership in the years 06/07 – 08/09. The profits have always remained below the personal allowance and in 08/09 the decision was made to cease trading as a partnership and continue the same trade alone. This was clearly shown on the 2008/09 tax return by showing the partnership ceasing on 30/09/08 and new self-employed pages showing trade commencing on 01/10/08.
The dilemma I have is that in 08/09 my clients share of the partnership loss was approx £4,000 and I am unsure whether this loss can be carried forward and offset against the 2009/10 self-employed profits. I accept that the loss would not be offset against the exact same trade but surely there is an argument that it is being utilised against the same profession/vocation. Furthermore I am sure that at some point in my career I have read something re treating the trade as being the same even if at times you have traded in partnership, on the basis of course that you are carrying out the same work.Any thoughts/comments would be much appreciated!Many Thanks
Was it really a cessation
You need to decide whether it was really the end of the partnership or if it was in fact the case that you client simply took over the existing business with the other partner leaving.
If it ceased and then they started again then the losses have been lost. If not the you should look in the Revenue guidance as you may actually have a continuation of the same business for your client albeit now as a soletrader.
The losses would then be available although as it is a continuation you don't have the cessation and then commencement of a new business which may affect the size of the loss that you had previously calculated. It may also mean the amendment of the 2008/09 tax return.