I am currently studying towards AAT and have not yet got to Tax yet but i would like to know why there is a difference and how it is calcualted. For example if i had a sole trader who's year runs 1st Jan to 31st Dec. Is it not difficult to calulate the tax and VAT if the year end accounts were done in dec, not April? thanks.
The tax year runs from 6 April to 5 April, and all profits from accounts have to be shoe horned into this format. The easiest way is simply to have a 5 April year end.
There are complex rules regarding opening years, closing years, overlap relief and capital allowances, too many to go into here.
