We deal with a market gardening/plant nursery client (not incorporated).
In the last year or two it has expanded its operations to include the provision of "packaged" floral displays and hanging baskets to pubs and retail outlets in the locality. This has turned out to be a highly profitable cost centre.
We have an internal disagreement in our office of whether an averaging election would be competent.
There might be an argument that the diversified activity is a new trade that should be reported separately. Then the averaging election would remain available, albeit not beneficial, restricted to the legacy market gardening activity, but excluding the expanded operations.
My feeling is that the separate trade argument would need to apply in order to prevent the averaging election from applying to the whole operation.
Aside from the averaging possibility there is no bottom line tax difference from merging them. Both aspects are profitable so is not as if we are trying to mop up losses without the requirement of a sideways loss claim. Up to now they have been presented as single trade.
All of the business's plant, machinery, labour and resources are deployed for both aspects of the business.
What say all y'all. Knife-edge or clear cut? Pure "elephant test"? Not enough info?
With kind regards