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Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 14152
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I ceased trading in 2011 and made a loss in that year. Please

Resolved Question:

I ceased trading in 2011 and made a loss in that year. Please could you tell me what I put in this section

You have said that you made income tax losses in the tax year 2011-12. Please complete the following questions.
Earlier years' losses (which can be set against certain other income in 2011-12):£
Unused losses carried forward:£
Relief now for 2012-13 trading, or certain capital losses:£
Year for which you are claiming relief above:
e.g. YYYY-YY

Obviously because I have ceased to trade I need to claim relief against previous years.

THanks
Submitted: 1 year ago.
Category: UK Tax
Expert:  Tony Tax replied 1 year ago.
Hi.

Can you tell me what the start and end dates were for your last set of business accounts please. What were start and end dates for accounting years before the last one? Which tax return have you taken the text you mention in your question from?
Customer: replied 1 year ago.

Start date 1/5/2011 - end date 30/04/2012


 


previous ones Start 1/5/2010 - end 30/4/2011


 


Text taken from 2011-2012

Expert:  Tony Tax replied 1 year ago.
Thanks.

In the 2012/13 tax year did you have any other sources of income such as salary or pension? Did you have any sources of income onther than your business in any of the three tax years prior to 2012/13, ie 2011/12, 2010/11 and 2009/10? Did you pay higher rate tax in any of those tax years? Did the business ever make a profit?

Did your first accounting period run from 1 May to 30 April in the following year? When was that exactly? Do you know what your pre-capital allowances profit was for your first accounting period?
Customer: replied 1 year ago.

In 2012-13 I received ESA and disability allowance only. No sources of income other than my business in the three previous tax years. Didnt pay higher rate tax and my business always made a profit up until 2011-2012


Business ceased trading 5/10/2011.


Yes the accounting period ran from 1 May to 30 April in the following year. had been trading since 1990's. Not sure what accounting period you are talking about in last sentence - do you mean the previous year 2010-2011.


 

Expert:  Tony Tax replied 1 year ago.
Thanks.

If you were trading in the 1990's did you start your business before 6 April 2004 or after 6 April 2004?

If you started your business before 6 April 2004, I need to know what the pre-capital allowances profit was for the year ended 30 April 1996.

If it was started after 6 April 2004, I need to know what the pre-capital allowances profit was for the first accounting period.

The information I get from one of thses profit figures could have a major beneficial impact on your tax position at the end of the life of the business. HMRC may be able to tell you the figures if you call them on the number here. The figure I am looking for is the "overlap relief" which should have been recorded in your tax returns for the last 15 or 16 years.

I have to go out for a while but I will be back early evening.
Customer: replied 1 year ago.

Started trading before 6 April 2004.


I have found the accounts as made up by accountant to 20 April 1996 but I have afraid I dont know which figure you want me to supply


This is what I have:-


 


CAPITAL ACCOUNT



Balance bought forward (970)


Add: Profit for year 24793


23823


Less: Drawings 27008


Capital Overdrawn (3185)

Expert:  Tony Tax replied 1 year ago.

Thanks.

Can you tell me what the adjusted loss was for the final period of the business please. You said earlier that the business ceased on 5 October 2011 but you appear to have drawn up accounts to 30 April 2012. Is that correct? Did your 2012 tax return only disclose your accounts figures for the year ended 30 April 2011? What was the tax adjusted profit for the year ended 30 April 2011 as disclosed in your 2011/12 tax return?

Customer: replied 1 year ago.

what do you mean by adjusted loss?

Expert:  Tony Tax replied 1 year ago.

Thr adjusted loss is the loss after adding back disallowble expenses and deducting capital allowances, the same way as you would have computed the adjusted profit (the taxable profit) in the earlier years.

Customer: replied 1 year ago.

£7414.00 was the adjusted loss. The accounts were made up to April 2012 should I not have made them up to then and made them up to 5 Oct. 2011


 


The tax adjusted profit for the years 2010-2011 was £12,776

Expert:  Tony Tax replied 1 year ago.
Thanks.

I'll work on the basis that your business ceased on 30 April 2012, not 5 October 2011. As you have completed and submitted your 2012 tax return, it will open up a can of worms to revise it with your figures for the period 1 May 2010 to 5 October 2011 which is how it should have been done and you are strictly out of date to do that in any event.

It will take a while to get my answer drafted so please bear with me.
Customer: replied 1 year ago.

I havent yet submitted my 2012 return - we have had pretty bad circumstances in our family recently and I am late completing it.

Expert:  Tony Tax replied 1 year ago.
OK.

In that case, what you should do is combine the figures income and expenses figures into one set of accounts covering the period 1 May 2010 to 5 October 2011 and put them all in the 2012 tax return. If you have a 2013 tax return to complete, there should be no mention in that of anything to do with your business as it ceased before the 2012/13 tax year.

I'll get back to you later today (early evening) with some figures and tell you which boxes to complete in the 2011/12 self-employment pages and other boxes in the core pages of the 2012 tax return.
Customer: replied 1 year ago.

Thank you very much, you have been very helpful, I look forward to your reply later.

Expert:  Tony Tax replied 1 year ago.
Hi again.

I'm in the process of calculating your tax position for 2011/12. Before I finalise them, can you confirm that the figure of £12,776 was your adjusted profit for the year to 30 April 2011 and let me know what the pre-capital allowances adjusted profit was for the year ended 30 April 1997.
Customer: replied 1 year ago.

Yes £12776 was the adjusted profit for year ended 30 April 2011


 


The figures from the year end 30 April 1997 are as follows:


 


CAPITAL ACCOUNT


 


bal bought forward (3185)


Add: Profit for Year 17535


14350


Less Drawings 18963


Capital Overdrawn (4613)


 


Sorry for delay in replying - had to find paperwork etc.


 

Expert:  Tony Tax replied 1 year ago.

Hi again. Thanks for the latest figures.

As your business ceased on 5 October 2011, you have a final period of account which runs from 1 May 2010 to 5 October 2011. The accounts for the year ended 30 April 2010 were disclosed in your tax return for the year ended 30 April 2011 so the figures for the final period need to be disclosed in your tax return for the year ended 5 April 2012.

You may need to re-work your capital allowances for the period 1 May 2010 to 5 October 2011 but for now I will use the figures you have given me.

The overlap relief is an amount of profit which is deemed to have been taxed twice on the change from the old tax system to the self-assessment system in 1996/97. As your business started before 6 April 1994, your Overlap relief figure is based on your profit for the year ended 30 April 1997. The overlap relief figure is £16,334 (£17,535 / 365 x 340). This represents a proportion of the profit made in the year to 30 April 1997 which was taxed in 1997/98, the first year proper of the new self-assessment system.

Your final period profit was £5,632 (£12,776 - £7,414). The overlap relief of £16,334 is deducted from that to arrive at a loss of £10,972. Complete the pages as follows:

SA103F

Put 05/10/2011 in box 7. Complete the boxes 14 to 64 for the income and expenses for the period 1 May 2010 to 5 October 2011. Put the overlap relief of £16,334 in box 68. You should have a loss of £10,972 in box 76. Since you probably have little other income in 2011/12, you should put the loss figure of £10,972 in box 78 to carry back for offset against income in 2010/11. Tell the tax office in box 102 "I want the loss of £10,972 from box 78 to be relieved by reference to my 2010/11 income".

Assuming your 2010/11 income was high enough to pay tax at 20% and Class 4 NIC at 8%, the tax relief for the loss will be about £3,072.16 (£10,972 x 20% + £10,972 x 8%). You should look at your tax calculation SA302 for 2010/11 to see how much tax and NIC you paid. If your profits were lower than £16,687 in 2010/11 then you won't have paid as much NIC as I have calculated. The same applies to the tax if your profits were less than £17,447. The tax relief figure should be put into box 14 of the tax calculation pages SA110.

I hope this helps but let me know if you have any further questions.

Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 14152
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
Tony Tax and 2 other UK Tax Specialists are ready to help you
Customer: replied 1 year ago.

Just a quick question, are you using the box numbers for the paper return, I am using the online return and the boxes are different - there is no box for overlap relief.

Expert:  Tony Tax replied 1 year ago.
Let me get back to you on that. I was using the box numbers for the paper return but I use the online return for my own tax return and there should be a box for overlap relief though I've not used it on my own taxes before.
Expert:  Tony Tax replied 1 year ago.
Hi again.

When you go into the self-employment section of the online tax return, there is a list of questions on the first page, the last of which is "Do you wish to claim overlap relief?". Put a tick in the box next to it. You then go through the income, expenses and capital allowances sections until you reach the section "Other tax adjustments page 2 of 2". Your overlap relief goes into the first box.
Customer: replied 1 year ago.

Thank you so much, you have been extremely helpful, I find tax returns completely overwhelming and difficult to understand. Your help has been invaluable.

Expert:  Tony Tax replied 1 year ago.
Thanks.

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