I prepare the self assessment tax return for a limited company director client, who has begun to earn a small amount of self-employed income from writing children's books. Her book contracts are fairly simple to understand - she receives a payment on signing the contract, a payment when the manuscript is delivered, and a payment when the book is published. My question is - is it as simple as including the income in the accounts according to when the various payments are due?
For example, she wrote one book in 2011-12. The contract was dated 1 July 2011 read:
£500 on signing agreement
£1000 on acceptance of manuscript
£500 on publication
I assume that the initial £500 is included as turnover in 2011-12. The manuscript was accepted on 30 April 2012 and the book was published on 31 December 2012. So, I would expect the £1000 and the £500 for publication to be included in the 2012-13 accounts.
I am aware of the possibilities of averaging income for creators of literary works over two tax years, but this is not an issue as my client's income is very small.
I have not dealt with a writer's accounts before (and wouldn't have planned to!), so any tips would be appreciated.