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Dates and setting up.

  • Member
  • Practice Licence
  • 10 posts
  • # 108838


I have applied for a Practice License having duly completed my exams and qualifications.

In the mean time, I have decided that I will open a business bank account on the day it arrives and not before. (I like to make sure ALL legal documents are in my possession before I start contemplating my new venture)

With this in mind, can I put the ALREADY purchased stationery, insurance cover, desktop computer etc. thru' the books, even tho' I have not yet placed any capital into the ''soon-to-be-opened'' business bank account? The invoice dates for these items will be dated BEFORE I open a bank account for the business.

(Capital which I will place into the ''soon-to-be-opened'' business bank account once the license has arrived.) Basically, it means I will be opening new Nominal Ledger Accounts before I open up a business account, but it's the dates of these transactions, I already have the invoices with dates on, that worry me. (putting in expense items into the ledger, before I even have a business bank account!)

Many thanks for any advice forwarded.



Edited at 24 May 2015 10:13 AM GMT

Edited at 24 May 2015 12:07 PM GMT
kjmcculloch
  • 1159 posts
  • # 108839

Hi Ken,

You can claim pretrading expenses for up to 7 years before your business starts.  You claim these as if they occured on the first day of training.

The legislation to back this up is s57 Income Tax (Tading and Other Income) Act 2005.  It says:


57Pre-trading expenses

(1)This section applies if a person incurs expenses for the purposes of a trade before (but not more than 7 years before) the date on which the person starts to carry on the trade (“the start date”).

(2)If, in calculating the profits of the trade—

(a)no deduction would otherwise be allowed for the expenses, but

(b)a deduction would be allowed for them if they were incurred on the start date,

the expenses are treated as if they were incurred on the start date (and therefore a deduction is allowed for them).
  • Member
  • Practice Licence
  • 10 posts
  • # 108841

Thank you Kris for your reply.

How would I put these thru' the books then with the dates that are on the invoices? ... or does that not matter?

All my current invoices will obviously pre-date the start up date of my new business.
kjmcculloch
  • 1159 posts
  • # 108852

You should ignore the invoice dates and claim them as though they happened on your first day of trading.

Kris
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