Offsetting setup costs against tax when starting up

samdevon

Hi.

Quite a basic accountancy question, does the time within the tax year that you start your business and incur large setup costs make a difference to what VAT and corporation tax you can offset these expenses against? That is if you start trading in Feb incurring all your setup fees then do you only have your March profits to offset these expenses against? So if you could you choose would you start a business in April? Its a restaurant if that makes a difference.

Thanks

InsideInsurance

You dont offset expenses against VAT - if you are flat rated then VAT is just based on revenue and if you're not flat rated then its simply VAT charged minus VAT paid and if its a negative figure you get a rebate.

For Corporation tax you set your own company year and it doesnt run to the financial year. So if you start 1st Jan then your year would follow the calendar year.

Similarly if you make a loss in one year, due to setup costs, expansion costs or something else then those losses can be carried forward and ofset against the next years profit