A limited company is set up for the sole purpose of buying some land and developing it. At what stage would it be deemed to be trading? When the land is purchased, when the development starts or when it is finally sold.
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Accounts
You will need to file accounts when due. Costs will form part of closing trading stock if intending to sell the development but as part of fixed assets if an investment.
If intending to sell i.e. trading then the closing stock cost brought forward for developing the land will be set off in the year of sale.
I don't think you are trading until the development can be advertised for sale i.e. marketing etc is active
Trading?
As a property developer the point at which the trade would be likely to commence would be when processing started (Birmingham Cattle By Products v CIR case 1919) so when the development commences. Prior to that expenses could be allowed as pre-trading expenditure if they would have been allowable had trading commenced.
Following Birmingham Capital Byproducts ...
I suggest trading starts when the land is acquired not when it starts to be developed. As Portia says in that case it was held to be when the company first acquired its raw materials.
Purchase of equipment
Suppose a company purchases equipment (fixed assets) to be used in the trade but does not immediately commence to use them.
Has the company commenced to trade for CT purposes?
RM
Trading is an activity
Whereas investment is essentially passive. The acquisition of assets whether as stock or as fixed assets is not the commencement of an activity - applying for planning permission would be which raises an interest thought - you do not have to own an asset to apply for outline planning permission. Is this the commencement of an activity? I'd say yes.
Surely might be
Whereas investment is essentially passive. The acquisition of assets whether as stock or as fixed assets is not the commencement of an activity - applying for planning permission would be which raises an interest thought - you do not have to own an asset to apply for outline planning permission. Is this the commencement of an activity? I'd say yes.
Applying for planning permission might be the commencement of an activity but might not.? It surely depends what is intended to happen once/ if permission received. If say an office built and then leased to A N Other then that might have more of a passive flavour irrespective of the "activity" of getting planning permission and building the office.