Relief for Pre-Trading Expenses

About this scheme

Relief for Pre-Trading Expenses, under section 82 of the Taxes Consolidation Act 1997, allows certain expenses incurred by a trade or profession in the three years before it commences to be treated as incurred on the date of commencement, and deducted in calculating that trade or profession's trading income. It applies to trades or professions, whether incorporated or not, that commenced on or after 22 January 1997. To qualify, the expenses must be of a kind that would have been deductible had they been incurred after commencement, and no other relief provision can also apply to the same payment. Typical examples include accountancy fees, advertising costs, feasibility study costs, business plan preparation costs, and rent for trading premises. The allowable amounts are not available for offset against income other than that of the trade or profession itself; where they create a loss, the portion attributable to the pre-trading expenditure is carried forward against future trading profits. No advance clearance from Revenue is required, though claims may be checked later.

Who can apply

• Applies to a trade or profession (incorporated or not) that commenced on or after 22 January 1997
• Expenses must be incurred in the three years prior to commencement of the trade or profession
• Expenses must be of a kind that would have been allowable if incurred after commencement — i.e. wholly and exclusively laid out for the purposes of the trade or profession, per section 81 TCA 1997
• No relief is allowable under any other provision for a payment that already qualifies for relief under section 82 (no double relief)
• Typical qualifying pre-trading expenses include accountancy fees, advertising costs, feasibility study costs, business plan preparation costs, and rent paid for the trade or profession's premises
• Where one company incurred the pre-trading expenditure and a different company commenced the trade, the company that commenced the trade may claim relief for that expenditure (to the extent not already used by the company that incurred it), provided relief would have been allowed under section 400 TCA 1997 had the transfer taken place after commencement

How to apply

1. 1Incur qualifying pre-trading expenses within the three years before the trade or profession commences.
2. 2Treat the allowable pre-trading expenses as if incurred on the date the trade or profession commences, and include them in calculating the trading income for that period; no advance clearance from Revenue is required, even where a different company is claiming expenditure originally incurred by another company.
3. 3Claim the deduction as part of the trade or profession's normal Income Tax or Corporation Tax return. If the deduction creates a loss, the part attributable to the pre-trading expenditure is carried forward against future profits of the trade or profession (any remaining loss may be offset against other income for the same period, e.g. under section 381 TCA 1997). Claims may be selected for verification by Revenue at a later date.