Tax return: Ceased self-employment but did not cease trading

[perfumeryart]

Hello everyone,

Glad to see the new ex-BF format back!!
I would appreciate your assistance with a tax matter.

I sold my sole trader assets to the limited company of which I am the director at the end of March 2021.

I am in the process of finalising my self-assessment tax return but I am at a loss of how to handle it because although I cease being self-employed (I draw director's wages and dividends from the company), the commercial activities will carry on under the Ltd company but keeping the sole trading business name.

Question is: on the self-assessment section, do I tick the box "did your business cease trading before 6th April 2021"? Since it is still trading but I sold the assets and equipment to the Ltd company and officially I am not a sole trader any longer?

I would be happy to hire the services of a business tax adviser here who could guide me about this and a couple of other issues such as cash basis accounts despite invoicing with money not paid yet...

Please DM me if you can assist via video chat on a fixed/hourly fee basis as I file the return myself but need serious tax advice.

Thank you

Isabelle

 

[Newchodge]

Are you, as a sole trader, still trading? If not, when did you cease? - Obviously on the date that the Ltd company began the trade of the previous sole trader. The Ltd company is a completely separate legal entity from you. Please get your head round that before you make a lot of mistakes.

 

[Gecko001]

I would contact HMRC about this. Forms do not always deal with all senarios. Sole trading businesses are not entities, but HMRC like to know their name nonetheless so that they can check up that the business matches roughly what the sole trader is saying he is earning.

 

[DWS]

As Newchodge says if you are no longer trading as a sole trader then it has ceased and the date it did is what you put on the tax return, you say you sold all the assets to the Ltd Company, did you seek advice before doing this? You may have been able to just transfer them.
Never phone HMRC for tax advice!

 

[perfumeryart]

As Newchodge says if you are no longer trading as a sole trader then it has ceased and the date it did is what you put on the tax return, you say you sold all the assets to the Ltd Company, did you seek advice before doing this? You may have been able to just transfer them.
Never phone HMRC for tax advice!

This is very useful. My accountant never mentioned the concept of "goodwill". I will look into this. Thank you!

 

[MyAccountantOnline]

....Question is: on the self-assessment section, do I tick the box "did your business cease trading before 6th April 2021"? Since it is still trading but I sold the assets and equipment to the Ltd company and officially I am not a sole trader any longer?

..

Based on what you've said - yes

The limited company is trading now not you - you and the limited company are separate legal entities and it will have its own tax return.