Is there a 'best' time to incorporate

Is there a 'best' time to incorporate

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Hi

I keep the records for clients who are partnership whose yr end is Jan.  They want to incorporate and seem to want to do so 'asap'.

Have I read (or dreamt) that consideration should be made to timing of incorporation re the self assessment tax liability?

Many thanks in advance for all your help

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By User deleted
07th Sep 2011 23:43

January ...

... is not a bad year end (April year ends are the worst as you potentially have 23 months coming in to tax in one year!).

Their final SA assessment will be on any accounts ending in the tax year, so worst case is 14 months (y/e 31/01 plus February and March).. There is also overlap relief to deduct so the first thing to find out is what that is if you don't know (the amount, not the concept!).

Once you know this you can plan accordingly. If they incorporated 1st October they would still be taxed on 31/01/11 on 2011 tax return as normal and 2012 would be on 8 months to 30/09/11 less overlap relief (presumably 64 days?).

I assume you are transferring goodwill and crystalising a gain at 10% after entrepreneurs relief, so that would go on their 2012 SA returns as well.

The best time could well have been 6th April as there would only be 2 months and one day taxable in 2012.

Don't forget to work out 2012 asap so you can reduce the payment on account in January 2012 if necessary.

To answer the question in conclusion, the best time to incorporate depends on the year end of the business.

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