What are pre-trading expenses ?
WHAT ARE PRE-TRADING EXPENSES ?
Pre-trading are expenses incurred by new start up businesses before they actually begin to trade
Examples of which are:
- Cost of business plans
- Advertising
- Legal fees
- Rent & Rates
- Training courses
- Accountancy fees
How pre-trading expenses are dealt under income tax and vat is set out below
A. Income tax / Corporation tax
Only pre-trading expenses ( incurred up to 3 years prior to trading) which were wholly and exclusively laid out or spent for the purposes of the trade or profession are allowable.
Unlike post-trading expenses, expenses incurred before trading can only be carried forward against future profits and cannot be used as set off against other other.
B. VAT
You can elect to register for VAT, to claim back vat on expenses incurred prior to trading
However, note if you cancel for whatever reason your vat registration, you may have to repay some of the vat refunds if any claimed and you cannot back-date the vat registration
Any queries on the above give me a call on 091 763817 or email me at oliver@taxreturnhelp.ie
