Prior period expenses

Prior period expenses

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I have a new client who submitted dormant company accounts for his company for the  period to 31 March 2010.

In fact the company had incurred expenses during the period, but the client didn't ask the advice of an accountant and decided that his company was dormant because it had no turnover, and that he would just add these expenses into the accounts to 31 March 2011.

It seems to me that the three options are:

1) Resubmit correct accounts to 31/3/10, together with a CT600 showing a nil liability and a loss c/f. Then do 31/3/11 accounts and tax as normal. Disadvantage, of course, is client having to pay costs for two sets of accounts and tax returns.

2) Prepare accounts to 31/3/11 including the expenses from the pre 31/3/10 period. The "most attractive" route, but not strictly correct and potentially further complicated by the fact that the client may have submitted VAT returns in the period to 31/3/10 clearly showing that there was expenditure (I don't know yet if this is the case or not, but do know he's been VAT registered from the start).

3) Prepare accounts to 31/3/11 NOT including the expenses from the pre 31/3/10 period - i.e the client effectively loses the tax relief on these expenses.

Any advice very much appreciated.

Replies (2)

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Me!
By nigelburge
20th Aug 2011 12:13

How much?

Are we talking about here?

And how much are the 2010 expenses in relation to the 2011 ones?

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By Connie1
20th Aug 2011 19:25

Good question

... I haven't seen the client's books yet. Ideally I wanted to have an idea of the approach I would need to take before he brought his records in for us to go through together.

That said, from the nature of the business, I don't expect income for the year to be more than £50k, and expenses perhaps £30k max. Total guess work as to the relative size of the expenses to 31/3/10 vs 31/3/11. 

 

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