April Question and Answer Corner

Newsletter issue - April 09.

Q. I formed my own IT contracting company in 1987, which made good profits. In 2006 that company bought the assets of several small record labels which were making a loss. In May 2008 I gave up IT contracting and my company has concentrated on music since then. The music business will probably make a loss in 2009. Can I set that loss back against the profits made by the combined music and IT businesses in 2008?

A. Yes you can. As both trades were active in 2008; the IT consultancy and the music business, there is no restriction on the amount of music business loss you carry back from 2009 to set against the profits made in 2008.

Q. In 2005 I retired from my architectural practice and sold my share of the business to the remaining partners. I invested the proceeds in Enterprise Investment Scheme shares (EIS), which I am about to sell, so I understand the gain from 2005 will now be taxed. Are there any reliefs I can claim to reduce that gain?

A. If the gain you made on selling your share in the architectural practice in 2005 would have qualified for entrepreneur's relief, which is possible if you were a partner for at least a year, you can claim entrepreneurs relief on that 2005 gain when becomes taxable in 2009. Entrepreneur's relief actually came into effect from 6 April 2008, but we pretend it was in place in 2005 for this test.

Q. A member of my staff has had a serious operation and will be away on sick leave for some weeks. If I send her flowers from the company will this be taxable as a benefit in kind?

A. HMRC ignore small gifts like flowers or chocolates to valued members of staff. They are classified as trivial benefits and are not taxable. If you were to send her a cash gift, or a gift voucher that would be taxable.