Alan Pink looks at the sometimes thorny question of when a business ceases to trade, and why it’s important.
The question of whether, and if so when, a business has stopped can be crucially important for all kinds of tax reasons. The following are just a few of them:
1. Loss relief
Generally speaking, if you have losses to carry forward in your business, the very last thing you want to do is cease trading. The reason for this is that losses in a business effectively disappear, and are no longer available for carry forward against income, if that business has ceased.
On the other side of the coin, terminal loss relief can apply when you cease, and this can sometimes be useful in allowing losses in the last period to be carried back against profits from earlier periods. So you need to know precisely when the business ceased, so
