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Where Taxpayers and Advisers Meet

Cease trading but weekly receipts thereafter

Lsp54
Posts: 70
Joined: Tue Sep 15, 2009 5:11 pm

Cease trading but weekly receipts thereafter

Postby Lsp54 » Thu May 02, 2019 11:45 am

My client ceased trading suddenly in December 2018 due to unexpected ill health. He was applying the cash basis on his income and there was a considerable amount owing from a customer when he finished. He started to receive £25 per week In January 2019. To carry on for many years. He wants to avoid doing tax returns in the future. Can anyone advise me how to report this income for 2018/2019 and in future years?
Any advice will be much appreciated.

bd6759
Posts: 3035
Joined: Sat Feb 01, 2014 3:26 pm

Re: Cease trading but weekly receipts thereafter

Postby bd6759 » Thu May 02, 2019 8:35 pm

Prepare the final accounts on the accrual basis.

Lsp54
Posts: 70
Joined: Tue Sep 15, 2009 5:11 pm

Re: Cease trading but weekly receipts thereafter

Postby Lsp54 » Fri May 03, 2019 7:47 am

Hello, thanks very much for your reply. My client has had to finish work for health reasons and has very limited funds, and these payments are to be received over 36 years, which is much longer than his life expectancy. These sort of arrangements don't always go the full distance. To pay tax on £46,000 in the year of cessation in the expectation of receiving these payments in the future would be very difficult. It would be favourable if he could treat any income in the year in which it is received, which would be under the tax limit in each year? And also mark his main trade as ceased for tax return purposes. Thank you again.

pawncob
Posts: 4268
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Re: Cease trading but weekly receipts thereafter

Postby pawncob » Fri May 03, 2019 12:20 pm

Reduce the payments to under £1000 pa and you won't have to declare them.
With a pinch of salt take what I say, but don't exceed your RDA

Lsp54
Posts: 70
Joined: Tue Sep 15, 2009 5:11 pm

Re: Cease trading but weekly receipts thereafter

Postby Lsp54 » Fri May 03, 2019 12:53 pm

Thanks very much. very useful. Helped me think it through.


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