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Basis period for self assessment

Basis period for self assessment

I have a new SA client. I have her income and expenditure accounts from her previous accountant from 2009-2012, made up to 5th April each year. However, having reviewed some of the the expense receipts and fee income, its clear that transactions from at least Jul 11 - Dec 12 have been included in the SA return 2011-12. My client does not have a copy of the paper return her accountant submitted for 11-12 for me to check the basis period (and not available in HMRC Online Services). However, she has told me that ther old accountant 'included more than April - April, as she did not earn much in that time'.

I'd appreciate any advice on what basis period I should include in her return 12-13. There is unlikely to be tax payable given the amounts involved, but I am wary of double counting.

Thanks

Alison

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17th Jan 2014 10:46

Well you have the usual problem caused when accountants don't use double entry.  Presumably there is no balance sheet, no bank balance and no bank reconciliation!

As you are on notice from the client, rightly or wrongly, that the previous accounts are not all they appear to be you will just have to ask the previous accountant for copies of their working papers. 

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By cbp99
17th Jan 2014 10:54

HMRC

will usually provide paper copies of previous returns within a couple of weeks. Which may not be in time for 31st, so you may need to file with estimated figures, and be prepared to send an amendment.

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17th Jan 2014 11:06

Don't quite see how obtaining copies of previous tax returns helps here.  If the OP's client maintains that her 2012 accounts included transactions that should properly have been included in her 2013 accounts, before the OP prepares the 2013 accounts they had jolly well better make sure that they know whether that is true or not and, if it is, what the relevant transactions were.  The only place that information is to found will be in the previous accountant's working papers. 

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By AAB
17th Jan 2014 11:23

Basis period

Thanks for your advice, I am trying to get hold of the working papers (and the return, as it should show the date the accounts were made up to) from the previous accountant. Would you advise that I exclude anything included in 11-12 from the 12-13 return? And is this something I should disclose in the self employment 'any other information' box?

 

Alison

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17th Jan 2014 11:37

Basis period?

AAB wrote:

Would you advise that I exclude anything included in 11-12 from the 12-13 return?

Alison

The basis period always has been and will remain the year to 5th April.

What is at issue is if the 2011/12 tax return was correct.  If you get the information before 31st January, it would be wrong to exclude from the 2012/13 accounts anything which had already been included in the 2011/12 accounts.  You should amend the 2011/12 tax return to reflect the correct figures for that year and submit the 2012/13 return with the correct figures for the later year.

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By cbp99
17th Jan 2014 11:33

I agree

that obtaining working papers would be ideal, but we do not know whether they will be forthcoming.

Copies of the previous returns should at least disclose the basis period used, and there is nothing to be lost by requesting them now.

 

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17th Jan 2014 11:18

Reconstruction

By comparing the income disclosed on the paper return and comparing it with the known income from the client's own records (I assume they have them) it should disclose whether there were additional sums included, allowing for provisions and accruals (although I doubt these were made if there are no accounts to support the returns).  There is clearly a danger of not just double counting but a failure to make correct returns in earlier years leading to an investigation, discovery assessments and heaven knows what. John's advice on obtaining the working papers is absolutely sound as well.  Belt and Braces time.

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17th Jan 2014 11:34

I thought you already had the accounts, which must show the date they were (ostensibly) made up to.  It would be bizarre if the tax return said the figures were made up to a different date, but by all means check.

Yes when you prepare the 2013 figures subtract anything that you know was included in the 2012 figures, when you have established the position.  I would only provide a white space explanation if the net profit you were subtracting was significant.

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By AAB
17th Jan 2014 11:42

Yes the income & expenditure

Yes the income & expenditure accounts state '5th April 2012', however as I have all the expense receipts from the client, I checked the category 'reference materials' containing items from 7/11 - 12/12, and it added up to the total for 'reference materials' on the 5th April 2012!!

Thanks again

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