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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15946
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I been making losses years and offset this against other

Resolved Question:

I been making losses years and offset this against other income I have now sold the asset at a profit
HMRC say that the business (sole trader ) was not trading with a view to realisation of profit and has disallowed the losses against other income
is this correct
Does the sale of the asset not show we made a profit?
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
.

What type of business do you run? What was the asset you sold?
Customer: replied 2 years ago.

Tony

It was a power boat hire

The boat was sold

Expert:  TonyTax replied 2 years ago.
Thanks.

Leave this with me while I draft my answer.
Customer: replied 2 years ago.

Ok I await to hear from you

My E mail is: *****@******.***

I may have already used this before under my name : Joan Howland

Expert:  TonyTax replied 2 years ago.
again.

The core of your business was to make a profit from the hiring out of a power boat. It wasn't to make a profit by selling power boats. The fact that the power boat was sold than you paid it does not mean your core business was successful as you've had four years of trading losses. If you've managed to recover all your losses by selling the boat, then some might see that as a lucky escape and put the HMRC decision to disallow the trading losses to experience.

From here, its impossible to judge whether your business was run on commercial lines or not and that there were reasons beyond your control which meant it didn't make a profit. The fact that you have sold the boat and appear to have ceased the business lends credence to HMRC's argument that this was a business which was unlikely to make a profit.

Take a look at the notes starting here information on what HMRC look at when assessing a business's viability.

If you want to argue against the HMRC decision to disallow the losses, then I would recommend that you appoint an accountant or tax adviser who can take a detailed look at your accounts and business records and to you an appraisal of what chance you have to overturn it.

I hope this helps but let me know if you have any further questions.
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