Limited Company trading status.

Limited Company trading status.

Didn't find your answer?

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.

Replies (7)

Please login or register to join the discussion.

avatar
By pauld
02nd Mar 2015 14:15

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

Thanks (0)
avatar
By Paul Soper
02nd Mar 2015 16:35

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.

Thanks (0)
Portia profile image
By Portia Nina Levin
25th Apr 2015 17:04

(No subject)

Thanks (0)
avatar
By chicken farmer
02nd Mar 2015 18:24

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.

Thanks (0)
Out of my mind
By runningmate
02nd Mar 2015 18:37

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

Thanks (0)
avatar
By Paul Soper
03rd Mar 2015 16:49

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.

Thanks (0)
Replying to ireallyshouldknowthisbut:
paddle steamer
By DJKL
03rd Mar 2015 16:56

Surely might be

Paulsoper wrote:

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.

Thanks (0)