Just getting my knickers in a twist over a self assessment a client has prepared themselves and hoping someone would clear the fog in my brain.
Sole trader has a shop and also a separate tennis coaching business (also as a sole trader). Shop made a loss but coaching made a profit and combined they make a small profit but this is below the personal allowance so no tax to pay.
However, could the loss from the shop be carried forward? My instinct is no as overall the individual did make a profit but there is a small niggling doubt in my head. This may not seem important now but moving forward I am creating a partnership for the shop with the clients wife and it is rapidly making profit.
Many thanks
Valerie
-- Edited by lots to learn on Wednesday 1st of March 2017 11:39:46 AM
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They are in fact very different. The shop is an organic veg shop. I do believe the structure should have been determined earlier.
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Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I agree with Valerie - these are two different trades and should be reported as so via the tax return. Question is firstly has he reported them as separate on the last retrun (via supplementray pages). You might have to re-do the tax return first.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Apologies, I should have made myself clearer as my reading my post anyone would assume the shop also tennis related.
They have been reported as two trades but obviously on the one personal self assessment.
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Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Yes, as a sole trader the combined trades will count towards the threshold, and the ST will have one VAT number. As as already been said, the two trades are reported separately on the tax return.
If the entity is different then the VAT can be separately assessed, as long as it's not to deliberately avoid paying VAT. (disaggregation rules)
-- Edited by Leger on Wednesday 1st of March 2017 01:00:42 PM
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
They are not at this stage VAT registered and when they are the shop will then be a partnership so will be easy to separate.
The two entities have been recorded on the personal self assessment as two separate activities so would it be the case then that the loss from the shop could indeed be carried forward ?
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Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Those who serve partnerships other than a husband wife team, are there many issues? I've always been put off by the behind the scenes nonsense. Thanks for the VAT clarification.
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
Ha yes! I think one of the first things I ever read in regards to this game, courteous of ICB was unless there is an agreement in place the profit share is 50:50, dating back to 18XX.
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
There should be an agreement in place even with 50:50 share of the business for in the event of arguments over decision making, its not just about p/s.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Thanks for all your help.
I agree with the comments re partnership agreements. It's the first thing I ask when taking on a new partnership. Why wouldn't you want to iron out potential problems before they occur.
In my area I find a lot of businesses being run by women or as a couple who for some reason register under husbands name as sole traders ????
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Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Sorry to bring this thread back up again but I now have new info so I am looking to make the best use of losses.
Client has completed own tax return for 5 years
11-12 No Tax due
12-13 Bus 1 - profit 2942 Bus 2 - profit 6925 Tax paid £352.9
13-14 Bus 1 - loss (1961) Bus 2 - profit 8242 No Tax due Loss of 1961 carried forward
14-15 Bus 1 - loss (3189) Bus 2 - profit 7422 No Tax due Loss of 5150 carried forward
15-16 Bus 1 - loss (5750) Bus 2 - profit 7228 No Tax due Loss of 10900 carried forward
It is my understanding that losses can only be carried forward 4 years. The clients also have a lot of unused capital allowances which could be utilised for future potential profits so I am not wanting to waste these losses.
Could I therefore use the loss from 13-14 of 1961 and potentially also 14-15 of 3189 to which client opted to carry forward to actually carry back against 12-13 profit which would in fact give a refund of tax. Then just leave the 5750 loss from 15-16 to carry forward.
If so would I just amend all the returns, is there a time limit in which this can be done?
Many thanks in anticipation
Valerie
-- Edited by lots to learn on Monday 6th of March 2017 12:03:59 PM
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Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I think the detail of timescales and how too is in that link I posted, cant recall exactly and sorry rushed off my feet, but I wanted to post as there is an HMRC webinar on trade losses later this week - might be worth attending. attendee.gotowebinar.com/register/1370428374286071043
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I've signed up to the HMRC Webinar now. Being going to do one of these for a while but just not got round to it so will hopefully learn a lot.
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Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
