Inland revenue tax return...is the loss too high?

jezabel

Hi,
Can anyone help please? I started a business on October 2007 and this is the first time I am filling a whole year tax return. I am self-employed.

My current net business loss is £376 (2008 to 2009 tax year)

My previous Loss from my first tax return from Oct 2007 to April 2008, the first 6 months I have started this business, was £638.

So the total Loss for this one year and half is £1014, do I have to write the total sum on my tax form...I am not an expert and I wondering if the loss is too high and I can have problem with the Inland Revenue...I am just asking this as I know they set up business courses or you can go bankruptcy if the loss is too high.

I just read that you can carry forward the previuos year loss (for example £638) to the next tax return (for example 2009 to 2010 tax year). Can you do that?

I have also read that a new business can have negative profits for the first two years in a five years time but after that, the other 3 years, they expect you to have profits. In case you keep negative profits you can have problem with the Inland Revenue.:mad:

Thank you for any advice and help you can give me! Liz

mikey72

Depends on your business, and if you conform to his model or not.
Losses in the first couple of years are ok, if you are investing the profits back. If you never make money why are you carrying on? That's when the tax man suspects you may not be declaring everything, and will ask more questions.
(You should have carried the first loss of £376 forward, so in year two your loss should have been £1014, and then carry that forward.)

jezabel

thank you...My business is small, I am selling books online. The loss is due to the stock I am buying, I have some profits but I am buying books with that...I bought many books and I am trying to sell them...for the moment my total loss is more than £1,000 in less than 2 years...

liz

jezabel

So with this kind of business It would be ok to have £1014 loss as I bought stock?:eek:....Is this business conformed to the model you are talking about, there are some information online I can read that can help me out to know more...thank you liz

Rolo_Tomasi

Your stock shouldn't be generating a loss. You can only include as an expense books which you have sold. Those purchased but not sold should be included as closing stock in your accounts.

jezabel

Hello...I think in my last thread I have not been clear enough...last year I invested the profit back and I have bought new stock (new books) for the business....the loss is including new stock just bought and all other business expenses I had during the past year...Liz

fengirl_2

You cannot include the cost of stock not sold. You need to make a calculation:
value of stock brought forward plus stock purchsed less stock on hand and this gives you the cost of sales which go into your accounts.

nikki2804

If you are really struggling with the form then contact the self assessment helpline one 0845 900 0444. They will be able to give you advice and possibly help you fill it in.

In regrads to a business conforming to a model, if HMRC suspect any business to be 'under declaring' they will investigate the matter, doesn't matter if its year 1 or 10.

jezabel

fengirl wrote: »

You cannot include the cost of stock not sold. You need to make a calculation:
value of stock brought forward plus stock purchsed less stock on hand and this gives you the cost of sales which go into your accounts.

thank you for this information...do you know where I can find information how to calculate the stock...I purchase more than £1000 last year in books, I had some stock left from the previous year, I have to see how much....thank you for letting me know...liz