Can pre-trade expenses apply to a dormant Ltd. company?

Birchwood

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Savvy_Sue

Unable to directly answer your question, but do bear in mind that you can only claim the % used for business of things like this, ie if you also use that monitor / chair for personal use then you should make a reasonable guesstimate for the business / private usage ratio.

persa

The sentence you've quoted seems out of context.

If you buy a bunch of stuff before the company is incorporated, then it will have been treated for book purposes as bought on day one of incorporation because it has to hit your accounts and your company didn't exist before incorporation.

If you buy a bunch of stuff now, it hits your accounts now.

For tax purposes, your expenditure will effectively hit your computation on the first day of the chargeable accounting period in which your company starts trading (providing that's within 7 years of the pre-trade expenditure, otherwise you lose the relief forever - but the 7-year cut-off appears not to be in point for you, you intend to start trading shortly).

HappyMJ

Birchwood wrote: »

Hi. I explored this question briefly in my previous thread but figured it was worth it's own so as not to get lost.

I have a dormant Ltd. company, set up in 2014, which has never done any business, no money has gone in or out and indeed a business bank account was never set up for it.

Within the next couple of months I will sort out a business bank account, restart the dormant company, and finally start trading as that Ltd. company.

In the mean time it would be highly beneficial for me to buy some extra equipment. Namely a high quality computer monitor, a new office chair, and some other 100% business related things so I can do my job more effectively. In total this will all cost around £2000.

That £2000 will for now be paid for using my personal current account, as there is no money in the business or indeed even a bank account.

I understand that you can claim 'pre-trade' expenses, but to do that I've read...

"When you record your pre-trading expenses, you’ll need to set the date of the expense as the incorporation date of your company."

Which makes sense! But since my incorporation date is long before the actual date I'll be buying these things, what are the alternatives?

Will the fact my company's currently dormant make any difference at all to any expenses I incur now, before I start trading again?

And yes, I'm on with getting a good accountant, I just wanted to know where I stand expense wise on the off chance I need to go ahead and buy some of the equipment before I've had a chance to speak to them.

Thanks again all

The alternative is to bring the company out of dormancy right now before you spend anything. You can do that today or at the very least by the end of the week. A few months won't make any discernible difference.

You lend your £2,000 cash to the company by sending that from your personal account to the business account and entering that into your accounts. The company spends it and when it earns some cash it repays you.

antrobus

Birchwood wrote: »

...Will the fact my company's currently dormant make any difference at all to any expenses I incur now, before I start trading again?...

Not in the slightest. The minute you, acting as an agent for the company, buy some stuff on behalf of that company, then the company ceases to qualify as dormant, becuase it has just enaged in a 'significant accounting transaction'.

Or as previous poster put it; "If you buy a bunch of stuff now, it hits your accounts now".

paddyrg

Wake up the company, lend it £2k, let it buy the kit, use it, make money, let the business repay the loan (no tax issues), job done

TheTracker

Buy the kit now personally. When you wake the company up sell it to the company. Apply some depreciation eg 25% straight line if longer than 6 months or so.