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Where Taxpayers and Advisers Meet

Trade commencement

Milbo
Posts: 45
Joined: Wed Aug 06, 2008 4:07 pm

Trade commencement

Postby Milbo » Tue Jun 27, 2017 8:36 am

The simple question is when did trade commence.

A fishing boat is acquired, improvements and modifications are made to the boat, tests completed, licences obtained and crew engaged.

The first commercial voyage is undetaken, they reach fishing waters, cast the nets, suffer mechanical problems and do not land a catch and return to shore. The skipper decides that the nets and rigging need to be replced which takes approximately four months.

We have treated the trade as having commenced on the day of the first commercial voyage however HMRC contend that trade commenced when the first fish were landed and offered for sale.

Any thoughts?

Thank you.

SteLacca
Posts: 446
Joined: Fri Aug 07, 2015 2:17 pm

Re: Trade commencement

Postby SteLacca » Mon Jul 10, 2017 11:42 am

I'd agree with you. Commencement of the first voyage. That was the date the first commercial venture started (regardless of whether it was profitable or not.

amingram
Posts: 18
Joined: Fri Nov 28, 2008 1:47 pm

Re: Trade commencement

Postby amingram » Fri Jul 21, 2017 7:28 pm

HMRC are wrong.

You set sail with the intention of catching fish for you to sell. That is when your trade commenced. The fact you had mechanical mishap duri g the voyage is neither here nor there

bd6759
Posts: 3106
Joined: Sat Feb 01, 2014 3:26 pm

Re: Trade commencement

Postby bd6759 » Sat Jul 22, 2017 10:29 am

He has got nothig to sell, therefore is not trading.

LozaACCS
Posts: 1504
Joined: Wed Aug 06, 2008 3:55 pm

Re: Trade commencement

Postby LozaACCS » Sat Jul 29, 2017 6:32 am

It would be wrong to conclude that an adventure in the nature of a trade that yields no produce to sell is not a trade, that said there may be merit in HMRC,s position that the "intended trader" was not in a position to trade at the earlier date.
There is no doubt that the expenses incurred will be relieved at some point, so I suspect the issue may be relevant only in claiming earlier year or sideways loss relief.

Milbo
Posts: 45
Joined: Wed Aug 06, 2008 4:07 pm

Re: Trade commencement

Postby Milbo » Mon Jul 31, 2017 8:59 am

Thank you all for your replies.

The contended trade commencement dates fell within different accounting periods and impacted on the capital allowances and subsequent loss relief claims as correctly identified by LozaACCS.


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