Hello
I am doing my first overlap relief claim as I am changing my clients self assessement year end to 5th April.
Her overlap profits go back 14 years to 01/02 and the old accountant has no record of what was submitted so I will pro rate the tax accordingly going by the 2002 accounts. Do I include class 4 NIC in my overlap relief calculation?
Thank you
Leigh
Replies (15)
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This information should still be held in HMRC's records.You should ring the agent helpline.
How are you intending to do this?
The Overlap Relief is a figure for profits that were assessed twice originally in getting to the standard basis of assessment.
The relief is deducted from the profits assessable in the year of change so will reduce tax & class 4 in that year.
You have given insufficient information to enable anything resembling a sensible answer being given. What is the current year end. What period did the original accounts cover? It seems from your post that you have not realised the method for calculating the O/L relief and what is released on the change of the accounting date.
You won't have enough information to do this from the accounts. You'll need the tax adjusted profit.
Get it from HMRC. Don't think they won't have this and you can submit any old figure. They know they'll need this information one day and they've recorded it.
And - yes - you get Class 4 relief too, as Paul says.
Hi. I called HMRC helpline and they only go back as far as 08/09 (or so the person who I spoke to advised).
Around £7500 overlap ? I'd say that's significant.
What did you ask for ?
The overlap relief ? Or the profits for the 2001/02 season so that you can work out the overlap relief from that ?
They'll have the former. Definitely.
Could always try sticking in £100K overlap relief, I'm sure HMRC would then miraculously find the correct figure.
So assuming the 2015/16 current year end is the year ended 30 June 2015 you are proposing preparing additional accounts for the period July 2015 to March 2016. You may find that you increase the assessable profit for 2015/16 even after overlap.
If the old accountant was using completely the wrong basis period, how did he get to that and will there actually be any profits that have been assessed twice to create overlap!?
Submitting 9 months, AND taking off an overlap figure sounds like a recipe for getting it even more wrong.
Sounds like you need to go back to the old accountant again and find out what he has been doing because something in not right
The previous Accountant prepared to the 30th June 2015 and all of that year is included in the 14/15 self assessment. I can see how that is wrong, but will therefore only be calculating tax on 01st July to 5th April less overlap. I will make notes on the return about what I have done to cover myself, unless I hear otherwise that's not what to do.
Thank you for your help.
Sorry, you've now convinced me that you have no idea of the principles involved here.
If the old accountant has included the June 2015 profits on the 2015 return, there's a lot more wrong than just the overlap relief. What date entries were made on the returns ? Presumably the returns were filed on paper as the software would have picked up a June 2015 year end on the 2015 tax return.
If the previous accountant has used the wrong accounts for the 2015 Return is it not reasonable to suspect that he has done so for every year since commencement, in which case there will be no overlap.
Well, we'd need more information on that.
Maybe a whole year's profits have been left out somewhere. We'll never know, will we ?