Client has made a profit trading on certain sports, similar to trading the stock market I supppose. He's made a profit of around 1k on the year and says it's just something he dabbled in whilst trade was quiet. All done through a sole director Ltd Co
Trouble is I haven't a clue how to record it, I've looked at investments - current on my VTT+ but it shows as a debit on the balance sheet and nothing on the P+L so that can't be right. Income - investments perhaps? On the opposite side of the coin though, what if he had made a loss on the trading, would I show the loss on the P+L but then disallow it on the computation?
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
He wants to show it through his accounts, is that not possible? If I put it through his DLA it wouldn't get taxed on would it? He uses something called a betting exchange and looking on their website you can use a Ltd Co.
But on the opposite side of the coin, the company would pay S455 on the "loan" created if he didn't pay it, so I can understand that.
I don't understand on the M&AA, surely as a sole shareholder/director he could simply adjust anyway, but curious myself, would that prevent him from doing so under normal circumstances?
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Just curious but why would your client want to put this through his books and declare a profit of 1K when it seems that it is just a tax free profit from gambling, if it is then surely it would just go through the DLA
__________________
Doug
These are only my opinions of how I see things and therefore should not be taken as advice
Is he claiming this is his 'trade'? (Or part of/second trade). I guess one way to look at it is - if he wins £1m on the back of it being a trade he will be happy to pay CT on it? Then divi tax to extract it? Whereas, as Doug say, on a personal level no CGT kicks in.
On the M&AAs I was just thinking that he might be acting contrary to the regs he has signed up to. He has a fiduciary duty of care to the limited company and it just sounds like he is maybe using it as a personal play pot when normal business is slow. If he advertises his business as one thing but then gambles with their case there could possibly be a case against him if he ever cannot pay his suppliers etc. Just random thoughts at the mo.
__________________
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
Edited out - sorry was pondering about spread betting - off on tangents!
Add on - https://www.gov.uk/hmrc-internal-manuals/corporate-finance-manual/cfm50380
Mention of gambling and the ultra vires aspect re M&AAs. Ive not waded through CTA09.
Trade and (given Ive just seen your post on Aweb and it could be) spread betting type issue/contract for differences thing, then worth further investigation. A very interesting one! Sooo wish I had more time. Do let us know what the Aweb gang say or if you find anything else out
-- Edited by Cheshire on Saturday 4th of November 2017 12:54:05 PM
__________________
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
Does spread betting work the same way? With this you can buy a bet, sell a bet or lock in a guaranteed profit on a bet. He's wanting it to go through his business so his profits are boosted, but even if this is allowed I wouldn't know where to put the transactions.
PS I've just seen your add ons - I'm going to suggest the DLA and if he insists on putting it through the business I will advise a more specialist accountant, as this is beyond my expertise.
-- Edited by Leger on Saturday 4th of November 2017 03:20:02 PM
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Hi John
Spread betting does yes, but can be dependent on what it is you are spread betting on. My grasshopper mind was thinking of spread betting on shares which someone I knew was doing. This led to me thinking of financial instruments as I got to thinking back to my corporate days dealing with swaps - floors and ceilings - an equivalent I suppose to your eg lock in to your buy, sell and guaranteed profit idea. Which is why I thought I should edit my post as I was off on all sorts of unrelated and irrelevant tangents. Sorry!
One thing as far as I understand though is that the spread betting is regulated by the Financial Conduct Authority rather than the Gambling Commission.
To be honest I think the over-arching issue here is - what is his trade? The other more pertinent I would suggest for you right now is - why does he wnt to show the income/profits in his company accounts? In truth on the face of it it sounds like vanity. (or maybe he has won big since the year end and is worrying he will pay income tax and has been listening to his mates down el pubo. I would find that out before you pass this one on to somone else.
__________________
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
To be honest I think the over-arching issue here is - what is his trade? The other more pertinent I would suggest for you right now is - why does he wnt to show the income/profits in his company accounts? In truth on the face of it it sounds like vanity. (or maybe he has won big since the year end and is worrying he will pay income tax and has been listening to his mates down el pubo. I would find that out before you pass this one on to somone else.
Hi Joanne
Second hand shop. He wants to develop the betting side further and treat it as a proper income stream and show a healthy company, but thinks tax man will class it as an income anyway should it become more successful. As far as I'm aware winning bets are tax free but I'm unsure as to where you draw the line between gambling and treating it as a trade (I haven't given any advice either way)
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
I thought it might be. Was gonna take a look at the open an account via a limited company bit. (unless you have a link for that page you can PM me to save time?
Plus wondering which jurisdiction they are governed by (in part - Gibraltar is the usual) - gonna have a gander.
__________________
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
