I have a sole trader client whose business is generating profits and whose year end is 30th April.
For reasons best known to himself he decided, with the help of an outside consultant, to cease trading as a sole trader on 31st March 2011 and to form two new companies who purchased the business, and who began trading on 1st April 2011. As far as I know there was no actual legal documentation reflecting the sale.
The staff have been transferred to the new companies and subsequent VAT returns reflect this change of status. As he sold the business as a going concern to non VAT registered companies there was VAT on the consideration (paid in instalments), but apart from that the VAT returns have had no output or input tax on subsequent VAT returns.
The 2010/11 tax return would ordinarily reflect the basis period as the year to 30th April 2010. Because of the way he sold the business I believe the basis period is now the period 1st May 2009 to 31st March 2011 - an extremely long period of account and one which will generate a huge tax bill.
I am racking my brains to see if I can justify a second basis period for the self employment which ends in the 2011/12 tax year, which should allow a lower overall tax bill. I wonder if anyone had any thoughts?