Schedule A or D?

Schedule A or D?

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Client operated 2 shops, one was closed after several years, due to trading losses, but the lease has a few more years to run. The question relates to tax treatment of future quarterly rent.

1) Can rent continue to be deducted as a trading expense, until shop sublet?

2) If the shop is sublet then I presume the rental income and expenses would then fall under Schedule A. However, the chances of getting a long term lease are slim. So if the shop was rented for a short term and then became vacant, would future rent payments still fall under Schedule A and therefore losses not allowable against business income?

Comments/advice would be appreciated

Jack

Jack

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By flurrymc
04th Sep 2006 15:34

Herbert Smith (A Firm) v. Honour (H.M. Inspector of Taxes)
Have a look at the above case, it seems to cover your situation. Any amount that is properly reserved in accordance with GAAP will be an allowable trading expense.

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