I am just suggesting that providing points for openhouse to consider, when making a decision, is not unhelpful (sorry for the double negative).
At the very least if he wants to consider whether this is a trade a starting point may be to review 'badges of trade'. However it seems having asked the question (because he was unsure presumably)....within 4 messages he appears to know its a trade (without any hint that the badges of trade have been considered).
No denying we should have the facts, but in their absence I think it is appropriate to look at what would potentially suggest it was a trade or not. Especially relevant as Openhouse seems to be persuaded that it is a trade from some fairly sparse replies....but seems encouraged by the fact the loss can be set against employment income.......
if it was a trade that commenced in 2018 I am wondering why it appears the intention it to report the 'loss' in the 2020-21 Return......surely the losses were incurred in 2018-19 and 2019-20......the house at that stage would have been trading stock....
Maybe they are not very good business people.....but to purchase a property with the intention of flipping it but then taking 2 years (but only spending 25k) and as a result selling at a loss all doesn't quite fit.
Have they bought their next property....? Did they register as self employed originally....given their intention to trade....how did they report their self employment in 2018-19.....are they planning to complete a return for that year given they have been 'trading' as it is that year that presumably the loss would apply to....
check with your agent...it really is that easy.....
But if you haven't got one type 'I need to register and file for self assessment' into google....the Revenue themselves have a little check facility....but if you don't know the answer to a question when going through the process i would suggest engaging an agent....
Agent: Have you uploaded all of your bank statements, and reconciled (extra £XXX to review if not)
Client : yes
Agent: OK I don't need to see the originals in that case
Agent: I can post the year end journals on XERO....but its going to be £XXX
Client: no need
Client: I have been told about this pukka tax scheme, backed by a tax barrister
Agent: don't touch it with a barge pole
Client: I have - here is the disclosure you need to enter on my tax return....
Of course it's the agents fault....the client is never wrong and will always give you the full facts with background information.....
Its an allowance....that's why both can claim it....it doesn't reflect the actual reality (the person can effectively decide how much/little extra 'actual' cost they incur by not turning on the heating etc, they still get the same allowance).
My answers
please......
I am just suggesting that providing points for openhouse to consider, when making a decision, is not unhelpful (sorry for the double negative).
At the very least if he wants to consider whether this is a trade a starting point may be to review 'badges of trade'. However it seems having asked the question (because he was unsure presumably)....within 4 messages he appears to know its a trade (without any hint that the badges of trade have been considered).
No denying we should have the facts, but in their absence I think it is appropriate to look at what would potentially suggest it was a trade or not. Especially relevant as Openhouse seems to be persuaded that it is a trade from some fairly sparse replies....but seems encouraged by the fact the loss can be set against employment income.......
for preparing the 'trading' accounts?....on-going advice regarding the 'trade'....
(I wonder if the 'intention' would have been different had there been a profit.....hmmm.....)
if it was a trade that commenced in 2018 I am wondering why it appears the intention it to report the 'loss' in the 2020-21 Return......surely the losses were incurred in 2018-19 and 2019-20......the house at that stage would have been trading stock....
hmm...
Maybe they are not very good business people.....but to purchase a property with the intention of flipping it but then taking 2 years (but only spending 25k) and as a result selling at a loss all doesn't quite fit.
Have they bought their next property....? Did they register as self employed originally....given their intention to trade....how did they report their self employment in 2018-19.....are they planning to complete a return for that year given they have been 'trading' as it is that year that presumably the loss would apply to....
check with your agent...it really is that easy.....
But if you haven't got one type 'I need to register and file for self assessment' into google....the Revenue themselves have a little check facility....but if you don't know the answer to a question when going through the process i would suggest engaging an agent....
Agent: Have you uploaded all of your bank statements, and reconciled (extra £XXX to review if not)
Client : yes
Agent: OK I don't need to see the originals in that case
Agent: I can post the year end journals on XERO....but its going to be £XXX
Client: no need
Client: I have been told about this pukka tax scheme, backed by a tax barrister
Agent: don't touch it with a barge pole
Client: I have - here is the disclosure you need to enter on my tax return....
Of course it's the agents fault....the client is never wrong and will always give you the full facts with background information.....
Its an allowance....that's why both can claim it....it doesn't reflect the actual reality (the person can effectively decide how much/little extra 'actual' cost they incur by not turning on the heating etc, they still get the same allowance).
'an accountant' appears to be the key.....perhaps a little like saying I 'I emailed the question on a website' and they said....
(I also find that what someone said and what the other person heard can be surprisingly far apart....especially when someone needs to be blamed)