New queries, issue 4306

Up for sale

Our clients a husband and wife decided to separate a plot of land from their extensive back garden and set up a limited company to purchase the plot in May 2007 and build a house on it to sell.

The company spent approximately £248 000 (including the cost of the land) in the first period of trading and we valued work in progress at 30 April 2008 at £250 000 to give a minimal profit.

Unable to sell the property the clients decided to let it on short-term six-monthly lets at approximately £900 per month from 1 February 2009.

In the accounts to 30 April 2010 work in progress was revalued at £240 000 and we claimed the £10 000 reduction in value as a trading loss to set against the rental income...