Client formerly operated from shop premises selling wedding dresses, but was unable to make any profits from doing so. They have now ceased using the shop (in the 2013/14 tax year), but still have the stock of wedding dresses to hand. They are continuing to try to sell this stock online, though without a great deal of success to date. The fact that these were the demonstration dresses may be a factor in this. They are currently exploring other avenues which they hope will prove more fruitful. This business has unused losses.
The client started a new retail trade in a completely unrelated field when the previous one ceased. As well as being in a different field, this new business is operated from different premises as well. This is proving much more successful, so there will be an ongoing requirement to submit returns anyway. My thoughts are that, since they are still trying to sell the dresses, the other trade could be considered ongoing. That would allow me to preserve the losses that would otherwise be lost on cessation of trade, though only for use against any income from selling the dresses. Can anyone see any problems with treating the trade as ongoing? If so, can anyone think of any other ways of handling this.
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Agreed
I agree that the wedding dress trade is ongoing until such time as the client stops trying to sell online (or at a car boot sale, etc.). Was the cost of the demo dresses written off to P&L at the time, rather than carried forward as a fixed asset or stock? If not, there will presumably be very little profit on the eventual sale, so carrying forward unused losses would be of little benefit.
Looks like you will have to complete two sets of self-employment pages until the client finally accepts that weddings have gone out of fashion!
Yes
Alternatively, should I just stop thinking about this given the client only brought in the records and their tales of woe this month.
I would say it is ongoing as well ,i am looking at something similar thinking of converting to the cash basis so i can get the relief this year for the stock brought forward as well as purchased this year.