I have just got a client who is behind on her books started trading January 2016
She runs an online shop and am wondering the best to advise her re her year end date (she want to have it at tax year)
All other clients i have tend to run to the tax year to keep it simple and invoices are raised at end of month so the 1st-5th April aspect never comes into it
Obviously with an on line shop she has sales 1st - 5th April
Is it best to advise her to include these in for 1-5 April 16 in 15/16 return or not? Opinions welcomed!!!!
I run to 31st March unless there is sufficient reason not to (eg subbie), so I would run Jan - 31st March 16 and 1st April 2016 to 31st March 2017 in the 2016/17 tax year.
One thing to watch out for (it doesn't apply here) is if the client starts on 1st April. You have to include 1st - 5th April in that tax year (as I found out to my cost once)
However there is no reason why you can't run Jan - 5th April then 6th April - 5th April, and if your client has said that's what she wants I would do that.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Whilst factually correct I wouldn't go with that option for these dates unless the business is making a loss in it's first year as there would be double taxation from Jan through April of the first year.
i.e. basis periods would be
2015 /16 - 01/01/16 to 05/04/16
2016/17 - 01/01/16 to 31/12/16
2017/18 - 01/01/17 to 31/12/17
see what I mean, those first few months are taxed in both 15/16 and 16/17.
All the best,
Shaun.
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Shaun
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.
Hi Shaun
But I was playing devils advocate here. On the basis the she only started trading in Jan of this year is it likely they know if it's going to make a profit or a loss? Given most small business owners rarely seem to draw up a forecast might it not be worth considering this on the bases of a couple more months of trade?
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
True, its going to be December before they know whether they will make a profit which is still before they need to file the 2015/16 SA.
My response was meant more for others who may be reading this and not realising the issues over choosing the accounting periods wisely where as the likes of ourselves would (where possible) look at the profit/loss position before making that sort of decision (or more properly helping the client to make that decision) so that we help the client to navigate basis periods in the most tax efficient manner.
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Shaun
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.
So you would simply include 1st April and 5th April sales and purchases for 1-5th April 16 in tax return 16/17 not 15/16
She hasnt expressed a specific desire for exact tax year date - has asked me whats best and to be honest i didnt know which was "the best"
Hi Gail, yes I would, but take note I'm a bookkeeper who does tax returns, not an accountant (1) My clients are always told that whilst I'm more than happy to do returns, I don't claim to save them money on tax (2), and if I feel they would be better served by an accountant who can, will tell them so. But, that said, all my clients are micro businesses and, other than a couple that are getting close, would not save enough to make the extra cost worthwhile.
(1) Yes ok Shaun, technically that does make me an accountant
(2) I will wherever possible, use tax savings that I do know about, like use of home where applicable, but base periods are out of my depth at the moment, so I don't use them.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
