B1.601 When can a business be said to start?

Business tax
Business tax | Commentary

B1.601 When can a business be said to start?

Business tax | Commentary

Division B1.6     Commencement, cessation and succession of a trade

For updates affecting this Division please see Part B0 Updates

Commencement of trade

B1.601 When can a business be said to start?

The question as to the date when a business was first set up and commenced is a question of law, as applied to the facts of the case1. There is no specific rule or interpretation provision on the point, and the question has, therefore, to be decided by reference to the ordinary meaning of the words in the statutory provisions (special basis of assessment on commencement of trade for income tax purposes etc2) and by reference to the facts of each particular case.

Similar principles apply when determining whether a change in activity is so significant as to amount to a new trade or whether a new activity is the continuance of the old trade of the start of a new one.

Commencement of trading

A distinction is drawn between setting up and commencing a trade or business and preparing to commence a trade or business. In general, the rule of thumb is that a trade is not normally commenced until a trader is both in a position to offer the goods or services and actually does so, or offers to do so, by way of trade. However (as illustrated in the case of Hunt) this is not always the case.

In Hunt3 a company was formed to launch a 'Health lottery'. The launch failed (as the company was unable to get a

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