First company year - residential letting

First company year - residential letting - not let - only purchase and renovation costs

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First company year - residential letting - not let - only purchase and renovation costs:
(not a question about capital vs revenue - I've got that covered).

For published accounts, clearly not dormant as there is a Balance Sheet with assets and liabilities - P&L a/c as normal, no income just expenses - all good for Companies House.

It is my understanding, that without letting, the company has not traded for the purpose of the CT600, that is to say that although the accounts have a P&L with expenses, they do not create a tax loss for the year.

Am I right, how do I complete the CT600 to deal with this?
(there's a first time for everything)

TIA

Replies (13)

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RLI
By lionofludesch
18th Apr 2024 17:33

I don't know that you need to.

No profits, no losses to report, the only reason would be if HMRC insisted. In which case, I'd say report zero.

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Replying to lionofludesch:
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By Gone Sailing
18th Apr 2024 17:39

Thanks, do you mean no CT600?
I could send a letter to HMRC to say it isn't trading.
But for me it's either the boxes this year, somehow if I file, or next year bringing in all the prior year expenses which won't be on next year's P&L.

I did think about ticking all the exclude boxes (like entertaining) but still don't know how to bring the expenses back in next year.

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Replying to Gone Sailing:
RLI
By lionofludesch
18th Apr 2024 17:49

How would you deal with the boxes (next year) if you were taking the job over from another accountant?

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Replying to lionofludesch:
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By Gone Sailing
18th Apr 2024 18:43

That's the thing, still stuck.

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Replying to lionofludesch:
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By Gone Sailing
18th Apr 2024 18:43

That's the thing, still stuck.

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Ivor Windybottom
By Ivor Windybottom
18th Apr 2024 18:11

Does this help:
https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2505

It confirms that the rental business does not start until income arises, so presumably you can get HMRC to treat the company as non-active until that point and no CT600's should be required until then.

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Replying to Ivor Windybottom:
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By Gone Sailing
18th Apr 2024 18:47

Thanks, yes, those were my thoughts, problem is, filing deadline imminent, 3 month correspondence turnaround at HMRC.
Actually, CT600 is 12 months, there's a thought, at least I can put off the decision:)
Still stuck with the CT600 next year and bringing in the costs.

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By Gone Sailing
18th Apr 2024 18:51

Using Taxfiler currently.
So next year (sic), I suppose I could override the Expenses fed through from the Accounts, and add two years together.
And a nice little letter that no-one will read.
(and that's the other thing about just allowing the first year CT600 to have losses!)

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By More unearned luck
18th Apr 2024 19:28

If the property cost more than £500K, you may have other tax compliance to do.

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Replying to More unearned luck:
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By Gone Sailing
18th Apr 2024 19:31

It wasn't thankfully.

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By Tax Dragon
18th Apr 2024 22:39

The links in PIM1106 may help.

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By Justin Bryant
22nd Apr 2024 10:16

The question is when does the company start a UK property business? This is answered in the link below as the point when the relevant property first becomes let.

https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2505

Per the link below, you should tell HMRC within 3 months of the company coming into charge for corporation tax (in the absence of a notice to file).

https://www.gov.uk/guidance/corporation-tax-trading-and-non-trading

See para 2 here (which says 12 months from the end of the accounting period, so I'm not sure where HMRC's 3 month thing comes from): https://www.legislation.gov.uk/ukpga/1998/36/schedule/18

If the CT600 is filed with HMRC in the absence of a formal notice to file from HMRC, this would be a voluntary/unsolicited CT600 per para 20A Sch 18 FA 1998 here:

https://www.legislation.gov.uk/ukpga/1998/36/schedule/18

TD's other relevant link is here: https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1106

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By Gone Sailing
25th Apr 2024 09:30

As the company is under notice to file it's easier to file a nil return with accounts attached.

Year 2 is dealt with in PIM2505:"Qualifying pre-commencement expenditure is treated as incurred on the day on which the customer first carries on their rental business. This is deducted, together with the other allowable expenses of letting, from the total receipts of the business for that year."

So in year 2, add year 1 and year 2 expenses together on the CT600 overriding the year 2 figures fed from the accounts side.

Thanks all.

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