I'm doing a set of accounts and tax return over the weekend. It's a sole trader start up. My client told HMRC she started her business on 05.04.11 and 2011/12 financial year is her first return. She has pre-trading expenditure. Question is this. Is it ok to ignore the 05.04.11 (as it's financial year 2010/11) and start everything up from 06.04.11. I would then put the pre-trading expenditure through on 06.04.11. As it is only one day I'm sure HMRC would be ok with this. I am right?
Is that what the client wants or were they manipulating their dates to ensure a first year loss by bringing everything into the company before any possibility of income?
If so they have made a mistake and should have chosen a date at least 6 days before the tax year end.
Even were this not a BIM71020 case don't forget that allowances would be pro ratered so her actions may not prove as beneficial as she believes.
I would clarify the situation with the client to determin their understanding and expectations first before making any decisions on their behalf,
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
