Self Assessment - New Business query

crazy_in_debt

Hi all

I have searched the web and HMRC's own info for the answer to this question but I have been unable to find one as yet so I'm hoping the raft of clever people on here may know?!

I'm helping my brother do his tax return as I have done for the past few years. He has 2 rental properties and previous returns have only required the property and employment pages and that was it.

In 2010 however he decided to set up a business and stopped employment. My question that I have failed to find an answer for is as follows.

He started making sales in June 2010 (in the 10/11 tax year) but he started buying stock and took the lease on a unit etc in January 2010 (in the 09/10 tax year). Does he need to complete a self employed page to declare the expenses incurred in the 09/10 year or should he just lump them in with the 10/11 tax year as that is when trade actually started?

I have even asked a former HMRC employee who dealt with self assessment and they had no idea.

So does anybody have a clue as to the correct way to do this please? Any advice will be greatly appreciated.

mrkbrrws

The stock would be carried forward in any case, as there have been no sales in the period to 5 April 2010.
Any other business expenditure which is incurred before trade starts is treated as if it was incurred on the first day of trading (http://www.hmrc.gov.uk/manuals/bimmanual/BIM46355.htm).

Therefore all the expenses should go on the 2010/11 Tax Return and no self-employment pages are needed for 2009/10.

chrismac1

I agree. The point at which you start trading is the point at which you either get your first sales order (non-cash business) or first cash sale in a shop etc. So that is June 2010.

crazy_in_debt

Thanks mrkbrrws & chrismac1 for your replies. I greatly appreciate that as I really have tried to find the answer for myself without success.

The reason I rarely post is because if you search the forums or the web in general I usually find the answer... But this had me beat.

Thanks again both