Hi All, I have a potential client (Self Employed) who has asked me because they started their business in Feb 09, is it best to file a tax return for Feb09 - Apr09, or would it be best to put through on a 09/10 tax return and have a longer period just to start???? Just would like to know what the best way to deal with this is.
I think you need to put all relevant income on the SA, and if the business started in the year 2008-2009, then on the 2008-09 SA return, you would have a basis period from the accounting period, therefore Feb 09 to 05 Apr 09. If that makes sense>the HMRC helpsheet 222 gives more info on the subject.
I set up as a bookkeeper on 1st April 09 (don't know why I did not choose the 6th.) I was sent a SA to fill in for the 5 days even though there was only a few expenses and my employment to fill in.
on the 08/09 return, you will have the period Feb - March (5 Apr) 09 on the 09/10 return, you will have the 12 months Feb 09 - Jan 10 (I am assuming the year end will be Jan 10)
the first 2 months will be on twice but take note of this as it will be treated as overlap relief, as and when this can be used - normally at ceasation
on all subsequent returns, the period will be Feb - Jan.
P
Denise
as I undertsand it, your 1st year ie 01/04/09 to 05/04/09 will be classed as zero profits.
The rules for the first 3 years of trading are different from other years, for self-employed individuals, and it can't be a question of choice.
The basis of assessment for the first year is always from the date of commencement to the following 5 April, even if that is only a month (or less).
The second year basis of assessment depends on whether or not the trading year ends in the fiscal year. If not, assess the profits in the tax year (ie, 6 April to 5 April). If yes, then it depends on how long the set of accounts is. If less than 12 months, then the first 12 months of trading are used, if greater than, or equal to, 12 months, the profits for 12 months to the accounting date are assessed.
Year 3 is assessed on the profits for the 12 months to the set of accounts ending in year 3 (the normal way).
It sounds complicated, but actually, it's commen sense if you think about it. Some profits, as BackOfficeGroup has said, may be taxed twice, but this is used at the end of the business, so doesn't get 'lost'.
Personally, I would always choose (and usually advise) that a trading year is the same as the tax year, unless there are any particular reasons why they shouldn't be. It makes life so much easier!
Ok, from what I read I feel that it would be best for the client to put from feb09-5thapr 09 on the 08/09 tax return and then to set the accounting year the same as the tax year, therefore on the 09/10 the accounting period from 6th apr 09 - 5th apr 10, will be filed and it would makes things easier....
) I was sent a SA to fill in for the 5 days even though there was only a few expenses and my employment to fill in.
