I have read somewhere whilst looking into this about there being a five year period where HMRC will give you the opportunity to make a profit, and if not after that they contact you basically asking why you’re bothering, but I’m not sure whether that’s true.
OK, maybe I can shed some light on this part.
Provided you are going into business with a reasonable expectation of making a profit after a few years, losses in the first five years can be offset against OTHER taxable income (e.g. a regular job). However, after five (consecutive, I think) loss-making years, that offsetting is no longer allowed. You can still offset smallholding losses against the smallholding (e.g. a smallholding loss in year 6 could be offset against a smallholding profit in year 7), just not against other income.
you would normally be expected to reach break even within 5 years
[member=26320]doganjo[/member] , do you have a reference for this? It's something I've as yet been unable to pin down definitively. When we first started out, we did think we'd be breaking even by now, but it hasn't quite happened. We're now in the process of re-appraising to see if we can turn things around, or scale back completely, and obviously being / remaining VAT registered is an important factor in this.
BTW, We use
FreeAgent for our accounts, which submits VAT returns at the click of a button. I believe there are more changes afoot soon, but TBH that's right at the bottom of a long list of things to worry about. I don't imagine it will be too difficult though, especially if you set up to do that right from the start.