The question of whether a trade has commenced and ceased, and the date of any such change, can have critical tax consequences. The following matters illustrate the importance of this topic.

(1)Pre-trading expenditure is only a revenue expense if certain conditions are satisfied (see ¶208-300).

(2)Losses can, for income tax purposes, be carried back under certain special provisions only if they are incurred during the first four tax years (see ¶261-000).

(3)Terminal loss relief can only be claimed if the trade has permanently discontinued (see ¶262-000).

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