Corporation Tax: trading and non-trading Corporation Tax: trading and non-trading
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  1. #1

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    Default Corporation Tax: trading and non-trading

    First year as a limited company, I was wondering what I should consider as my start trading date?


    So far, I have made no trade. I have however invested in capital assets and other purchases required before starting a bussiness.

    for example, I have bought a resin printer to print typodonts to practice my skills, along with few other medical materials.


    None of the purchases were for the purpose of selling to make money, my business provides services.


    How critical is to get the date exact? If not critical, I was just thinking to put the first day of incorporation (19th June 2020) as my trading date, even thought I had no income yet. The problem with that is its more than 3 month since than, but HMRC said its no big deal.



    Thank you in advance.

    Your limited company's first accounts and Company Tax Return: You started trading after your company set up - GOV.UK
    Last edited by kia2094; 22nd October 2020 at 00:17.

  2. #2

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    Do you have an accountant?
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  3. #3

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    Quote Originally Posted by northernladuk View Post
    Do you have an accountant?
    One said start on the incorporation day, the other said to wait you make money or buy items for sale.

    The discrepency in answers making me think there is a reason we have a hiarchy in income based on professions.



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  4. #4

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    Quote Originally Posted by kia2094 View Post
    One said start on the incorporation day, the other said to wait you make money or buy items for sale.
    And you no doubt asked each why their recommendation was beneficial over the other. What were the answers?

  5. #5

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    I think this seems pretty clear to me:

    Corporation Tax: trading and non-trading - GOV.UK

    If you're engaging in business related activities, then you're trading.

  6. #6

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    Quote Originally Posted by kia2094 View Post
    One said start on the incorporation day, the other said to wait you make money or buy items for sale.
    Who are the two accountancy firms you are paying to do your accounts?

    Why are you paying 2 firms?
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  7. #7

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    Quote Originally Posted by WTFH View Post
    Who are the two accountancy firms you are paying to do your accounts?

    Why are you paying 2 firms?
    one brother and one uncle....
    Nobody pays two firms. Certainly not the OP.

    To the OP. Not sure there is any particular advantage in having one start vs. another. I'd just got for date of incorporation. You're going to have to do your filings against that date. And if say you started your CT year at the beginning on the next month (which it will become moving forward), there's not much extra paperwork.

    So my suggestion is engage an accountant formally. And not a family member. And take their advice. Read the sticky thread for recommendations and lengthy discussions.
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  8. #8

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    Quote Originally Posted by ladymuck View Post
    I think this seems pretty clear to me:

    Corporation Tax: trading and non-trading - GOV.UK

    If you're engaging in business related activities, then you're trading.
    Thank you for the reply,


    I made the same decision, just wait for my first trade or item bought for purpuse of selling to set the start date.

  9. #9

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    Quote Originally Posted by kia2094 View Post
    First year as a limited company, I was wondering what I should consider as my start trading date?
    Why do you think that this matters?
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  10. #10

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    Quote Originally Posted by kia2094 View Post
    Thank you for the reply,


    I made the same decision, just wait for my first trade or item bought for purpuse of selling to set the start date.
    Didn't you already buy stuff to start practising and getting ready to sell, which could be argued to be preparations or in some cases R&D. Wouldn't you consider this a business activity even though it isn't directly associated with a purchase or a sale. It's still business activity no?

    Or was all that about investing in capital assets and practicing a red herring???
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