When does trading commence?
If an individual decides that he would like to do up a property and sell it on, then he clearly becomes a property developer. He then goes to look for properties that are suitable. This takes a number of week using fuel to visit properties. He makes telephone calls etc. He eventually identifies a property which is suitable. In the process, he has incurred expenditure for aborted legal fees. However, when does trading commence?
1. Is it the day he makes the decision?
2. The day he starts looking.
3. The day he finds something?
4. The day that he sells the renovated property.
So then when does he become liable to register as self employed and start paying NIC?
Also, in respect of legal fees for the aborted purchase, would anyone agree they are deductible. Obviously if it was for a property which was to let out then it is capital and cannot be recovered, but this is clearly a trade. In that case I presume they would be deductible. After all, if he was doing up and selling on 30+ properties a year and one fell through, then the legal fees would be deductible.
Finally, if the year end comes before the sale, I presume that the loss would be available for either carry back or set off in the usual way. (think HMRC v the rabbit breeder)
- Small hotel - food for personal use 122 2
- Late RTI submissions on change of accountants 79 2
- Xero Pain Points 182 11
- VAT - How hard is it? 289 15
- Tax Return for arrivals into the UK 127 4
- New starter - tax code 91 3
- Tax Filer - Transfering figures from partnership to personal returns 86 4
- Copies of every transaction can't be OK!! 543 9
- ACCOUNTING TREATMENT FOR DISBURSEMENTS 215 3
- Childcare 255 4
- Bookkeeping - Relevant Qualifications? 209 2
- The importance of Grammar 783 21
- Overdrawn directors loan account. 790 19
- New .accountant domain name extension 92 1
- VAT REGISTATIONS 200 4
- SA302 list of lenders accepting alternative 1,455 18
- Can I force IRIS to produce an amended tax return ? 206 5
- Fees for successfully defending a COP9 enquiry 406 12
- Why does Aweb always take the nuclear option … 2,535 53
- Is this dodgy? 774 17
- Any knowledge of salesorder.com 357
- Chart of account segments; Balance sheet vs P&L 293
- HMRC RTI Filing Problem 278
- Goodwill and the Summer 2015 Budget 276
- Could and would anyone here carry out a hot file review of some non statutory audit work please? 268
- Electric Car 219
- S222 Charge 199
- What is the best acounting software for online international retail business? 192
- Foreign Tax on Pensions 188
- Company Structure 168