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Resumption of trading after TLR

Client claimed TLR prior to winding the company up but records for subsequent year show trading

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A client informed us last year that they had ceased trading permanently and that, once the accounts were filed and liabilities discharged, they wished to wind the company up.

Fast forward to this year and we are almost but not quite in a position to wind the company up so we requested bank statements, etc, in order to satisfy ourselves that no further trade had taken place.  Sure enough, there were transactions which did not purely relate to the tidying up of the balance sheet.  Admittedly only a couple for selling a vehicle and recharging some motor expenses but, nevertheless, technically trading.

How do we deal with this?  I don't believe it was a deliberate attempt to defraud HMRC by getting TLR early - in fact, I actually think it is the client genuinely ensuring that they have dealt with the disposal of the vehicle, etc, properly but, in doing so, has created an issue.  I've never come across the issue before to know how to deal with it.

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By Accountant A
30th Dec 2019 11:51

I'd let your PII provider know about this.

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Replying to Accountant A:
By JCresswellTax
30th Dec 2019 11:53

Hardly think it is a PII issue if the client was asked at the time and (incorrectly) confirmed trading had ceased.

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Replying to JCresswellTax:
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By Accountant A
30th Dec 2019 12:07

JCresswellTax wrote:

Hardly think it is a PII issue if the client was asked at the time and (incorrectly) confirmed trading had ceased.

I would have thought that the accountant might have questioned what the company had done with the vehicle it still had on the balance sheet after it had been shut down.

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Replying to Accountant A:
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By bendybod
30th Dec 2019 16:28

I don't disagree with you. We all overlook things occasionally though.

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Psycho
By Wilson Philips
30th Dec 2019 12:16

Disposal of an asset previously used in a now ceased trade is not a trade. Similarly, re-charging of expenses does not necessarily amount to a trade. If anything, I’d say that what you have are post-cessation receipts.

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Replying to Wilson Philips:
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By Tax Dragon
30th Dec 2019 12:56

Post cessation capital receipts, at that.

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Replying to Tax Dragon:
RLI
By lionofludesch
30th Dec 2019 13:01

Tax Dragon wrote:

Post cessation capital receipts, at that.

Agree. It's not trading, it's disposing of the assets remaining at the end of the trade.

Move on. Nothing to see here.

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Replying to Tax Dragon:
Psycho
By Wilson Philips
30th Dec 2019 13:56

I suppose that the one question that needs to be asked is - why was the company incurring motor expenses that needed to be re-charged, and re-charged to whom? (Is that two questions?)

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Replying to Wilson Philips:
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By bendybod
30th Dec 2019 16:27

It is two questions, to which I certainly know the answer to the second. Again, relating to the vehicle, it was being loaned to another entity as it was not required by the company (insurance etc in order) and the expenses were charged to the second entity.

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Replying to bendybod:
Psycho
By Wilson Philips
30th Dec 2019 17:08

Whilst vehicle hire can certainly be a trade, if the vehicle were simply being lent to another company pending disposal it may be that all you have here is miscellaneous income/expenses.

In any event, on the assumption that the previous trade was not vehicle hire, even if the hire did amount to a trade this would likely be a new trade and should not disturb the terminal loss position.

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