Changing Accounting date...


J

Joanne Hewitt

For the last 3 years, I have used 30th Sept as my y/e date. When I
completed my last 3 tax returns, I have inlcuded all profit for the
full tax year, and have not gone by accounting date.

I have only just found out that most people use the profit from their
accounts, and put the rest in overlap profit and carry it forward.

My question is, I would like to use the profit from my a/cs from next
year's return and make it easier, so which of the following is better
to do:

1. Tax Return 03/04 - Use profit from 6th Apr 03 to sep 04, and use
overlap profit to carry fwd. 0r...

2. Do my y/e on 30th sept as normal, then do another y/e on 5th April
(using this date in following years).

I would apprceiate any advice,
many thanks,
Joanne
 
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J

Joanne Hewitt

Sorry - I also meant to add that I did ask my local friendly Revenue office,
but the man just referred me to form IR222 which I have read back to front
anyway. Some help they are...

Joanne
 
P

Peter Saxton

For the last 3 years, I have used 30th Sept as my y/e date. When I
completed my last 3 tax returns, I have inlcuded all profit for the
full tax year, and have not gone by accounting date.

I have only just found out that most people use the profit from their
accounts, and put the rest in overlap profit and carry it forward.

My question is, I would like to use the profit from my a/cs from next
year's return and make it easier, so which of the following is better
to do:

1. Tax Return 03/04 - Use profit from 6th Apr 03 to sep 04, and use
overlap profit to carry fwd. 0r...

2. Do my y/e on 30th sept as normal, then do another y/e on 5th April
(using this date in following years).

I would apprceiate any advice,
many thanks,
Joanne
What's "overlap profit"? I can guess but I don't see why you even
bother with the concept.

I do my accounts to 31 March and I find that easy enough.
 
P

Peter Saxton

OP refers to overlap profit, so can't be Ltd Coy.
Isn't it only relevant when you change your accounting period or close
the business? I know you are considering that but I meant in the past.
 
M

Martin

Peter Saxton said:
Isn't it only relevant when you change your accounting period or close
the business? I know you are considering that but I meant in the past.
It also arose (and is thus carried forward) for pre-SA businesses re. the
transitional period, and for post-SA start-ups in opening period (unless
already using 5 April y/e).
 
D

Doug Ramage

Joanne Hewitt said:
For the last 3 years, I have used 30th Sept as my y/e date. When I
completed my last 3 tax returns, I have inlcuded all profit for the
full tax year, and have not gone by accounting date.

I have only just found out that most people use the profit from their
accounts, and put the rest in overlap profit and carry it forward.

My question is, I would like to use the profit from my a/cs from next
year's return and make it easier, so which of the following is better
to do:

1. Tax Return 03/04 - Use profit from 6th Apr 03 to sep 04, and use
overlap profit to carry fwd. 0r...

2. Do my y/e on 30th sept as normal, then do another y/e on 5th April
(using this date in following years).

I would apprceiate any advice,
many thanks,
Joanne
When did you start self-employment - 1 October 1999? If so, it is very
likely that your Tax Returns for 2000-01 and 2001-02 are incorrect, if you
used time apportionment. Or did you actually produce accounts for 5 April/31
March (quite easy with accounts software)?

You may need to inform the IR, if there is a significant difference. This
could involve interest and penalties.
 
J

Joanne Hewitt

I started 1st October 2000, and my accounts were done up to 31st March 2001
(first 1/2 year). My tax returns are correct, but I/m just trying to find a
simpler way of doing them.
Joanne
 
D

Doug Ramage

So what did you do with the accounts for the year ended 30 September 2001,
which should have formed the basis of 2001-02 SA Return?
--
Doug Ramage

Joanne Hewitt said:
I started 1st October 2000, and my accounts were done up to 31st March 2001
(first 1/2 year). My tax returns are correct, but I/m just trying to find a
simpler way of doing them.
Joanne
 
D

David Floyd

So what did you do with the accounts for the year ended 30 September 2001,
which should have formed the basis of 2001-02 SA Return?
Not if she had already changed her year end. She said first accounts
done to 31/3/01, so presumable next accounts were to 31/3/02 which also
being the basis for 2001/02.

DF
 
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D

Doug Ramage

David Floyd said:
Not if she had already changed her year end. She said first accounts
done to 31/3/01, so presumable next accounts were to 31/3/02 which also
being the basis for 2001/02.

DF
Except that does not square with the original post - "For the last 3 years,
I have used 30th Sept as my y/e date."
 
M

Martin

Doug Ramage said:
Except that does not square with the original post - "For the last 3 years,
I have used 30th Sept as my y/e date."
Following sentence says "When I completed my last 3 tax returns, I have
included all profit for the full tax year, and have not gone by accounting
date."

As I read it, the 30/9 a/c's have merely been an academic exercise, since
5/4 (or 31/3) FY accounts have also been prepared each year.
 
D

Doug Ramage

Martin said:
Following sentence says "When I completed my last 3 tax returns, I have
included all profit for the full tax year, and have not gone by accounting
date."

As I read it, the 30/9 a/c's have merely been an academic exercise, since
5/4 (or 31/3) FY accounts have also been prepared each year.
You may well be correct - which is why the OP needs to clarify the position.
 
J

Joanne Hewitt

Ok, here goes:

Started business 1.10.00, did 1/2 year a/cs to 31.3.01 (inc 6 months
cap.allowances) and used these figures on SA form 5.4.01, incl of course my
employment income from April 00 to 30.9.00.

In Sept 01, I completed first year end a/cs, and made a note of the diff
between to the 2 a/cs to use for the following year's Tax return. April 02,
did another 1/2 year a/cs and added figures to Sept 01 a/cs (less the
amounts I had already declared).

Hope this makes sense!!

This has all occured because in April 01 when I received my first tax return
it said to put all income earned during the previous tax year, so I thought
I had to do that and not wait until Sept 30th that year, when a full first
year's a/cs would be done.

Joanne hewitt
 
D

Doug Ramage

It seems that you have probably done everything correctly for a y/e of 31
March. But did you insert 30 September as your year end on the Self-Employed
pages of your SA Return?

The normal method is to time apportion - i.e. 6/12ths - for the opening tax
year of 2000-01. However, IMHO, it is perfectly legal to actually draw up a
set of accounts for the period ended 31 March 2001 (which is what you did),
as this gives a more accurate taxable profit.
--
Doug Ramage

Joanne Hewitt said:
Ok, here goes:

Started business 1.10.00, did 1/2 year a/cs to 31.3.01 (inc 6 months
cap.allowances) and used these figures on SA form 5.4.01, incl of course my
employment income from April 00 to 30.9.00.

In Sept 01, I completed first year end a/cs, and made a note of the diff
between to the 2 a/cs to use for the following year's Tax return. April 02,
did another 1/2 year a/cs and added figures to Sept 01 a/cs (less the
amounts I had already declared).

Hope this makes sense!!

This has all occured because in April 01 when I received my first tax return
it said to put all income earned during the previous tax year, so I thought
I had to do that and not wait until Sept 30th that year, when a full first
year's a/cs would be done.

Joanne hewitt
 
M

Martin

Doug Ramage said:
It seems that you have probably done everything correctly for a y/e of 31
March. But did you insert 30 September as your year end on the Self-Employed
pages of your SA Return?

The normal method is to time apportion - i.e. 6/12ths - for the opening tax
year of 2000-01. However, IMHO, it is perfectly legal to actually draw up a
set of accounts for the period ended 31 March 2001 (which is what you did),
as this gives a more accurate taxable profit.
--
JH - I fully agree with Doug's comments. As I mentioned in post 5/9, I see
little point in continuing to prepare a/c's to 30/9 each year.
 
J

Joanne Hewitt

Hi again,

Yes I put my accounting dates as 1st Oct to 30th Sept, and the basis period
as 6th April to 5th April.

If on my first return, I had waited until 30th Sept 01 until I did my
return, I should have put 6/12ths for the actual profit and 6/12ths in
overlap profit to c/f? Would the amount c/fwd have been carried fwd every
year until needed?

Thanks,
Joanne

Doug Ramage said:
It seems that you have probably done everything correctly for a y/e of 31
March. But did you insert 30 September as your year end on the Self-Employed
pages of your SA Return?

The normal method is to time apportion - i.e. 6/12ths - for the opening tax
year of 2000-01. However, IMHO, it is perfectly legal to actually draw up a
set of accounts for the period ended 31 March 2001 (which is what you did),
as this gives a more accurate taxable profit.
 
M

Martin

Joanne Hewitt said:
Hi again,

Yes I put my accounting dates as 1st Oct to 30th Sept, and the basis period
as 6th April to 5th April.

If on my first return, I had waited until 30th Sept 01 until I did my
return, I should have put 6/12ths for the actual profit and 6/12ths in
overlap profit to c/f? Would the amount c/fwd have been carried fwd every
year until needed?

More or less. You would actually include OP in 2nd return (i.e. y/e 5/4/02)
since this is the first time the same profits get taxed twice. 6/12 is
probably OK - but you can also apportion by actual days (187/365 in this
case). Note that your two references to 6/12 are the _same_ 6/12. So had
it been 7/12 for 1st period profits, it would also be 7/12 OP.

OP is then carried fwd until you cease trading or change a/c date. If
that's decades hence, you can imagine how little it will then be worth :-(
 
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D

Doug Ramage

Martin said:
More or less. You would actually include OP in 2nd return (i.e. y/e 5/4/02)
since this is the first time the same profits get taxed twice. 6/12 is
probably OK - but you can also apportion by actual days (187/365 in this
case). Note that your two references to 6/12 are the _same_ 6/12. So had
it been 7/12 for 1st period profits, it would also be 7/12 OP.

OP is then carried fwd until you cease trading or change a/c date. If
that's decades hence, you can imagine how little it will then be worth :-(
If you are happy with 31 March y/e (and I can make no comment on whether it
is preferable to 30 September or any other date), I would be tempted to
continue with it. You could make a comment in the white space, if you so
wished.
 

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