6 April year-end - overlap relief?

6 April year-end - overlap relief?

Didn't find your answer?

I have clients trading since 1992 with a 6 April year-end. Ceasing 31 March 2005. Given this straddles pre-SA and SA I expected there would be some transitional or overlap relief to be given on cessation. HMIT says none with a 6 April year-end.
1) Is the Inspector right?
2) If not how do I work out the relief?
(I have all the figures back to commencement)

Steven Newnes

Replies (6)

Please login or register to join the discussion.

avatar
By User deleted
04th May 2005 16:03

Year-end confirmed
Thank you Malcolm. The year-end is 6 April, not 5th. Any other comments?

Thanks (0)
avatar
By User deleted
04th May 2005 17:50

Overlap
With a 6 April year-end the 1996/97 assessment should have been based on the average of the two years ended 6.4.96. 1997/98 should have been based on the year ended 6.4.97. The overlap profits would be 364/365 X profits y.e. 6.4.97 (before capital allowances). If a loss arose before CAs there would be no overlap relief.

Entries should have been made within the self-employment pages of the tax returns for each subsequent year showing the overlap profits brought forward and carried forward. However, the fact that these appear not to have been entered should not result in denial of the claim.

So 2004/05 should be based on the year ended 6 April 2004 plus the period 7 April 2004 to 31 March 2005 (almost two years). The overlap relief determined as above, would then be set against this.

Thanks (0)
avatar
By AnonymousUser
04th May 2005 16:30

The technical answer is..
.. that there should be overlap relief. It is based on the amount of profit taxed in the 97/98 year, before capital allowances for the period, arising from the end of the basis period used for 1996/97 up to 5 April 1997. In your circumstances I would guess 1996/97 was made up of one half of the two year to 6 April 1996 which would mean your overlap period would be 7 April 1996 to 5 April 1997.

Perhaps the Inspector jumped to the same rash assumption I did!!

Thanks (0)
avatar
By AnonymousUser
04th May 2005 16:31

What a difference a day makes!
The Inspector is wrong - refer him to FA1994 Sch 20 para 2(4). The basis period for 1996/97 will have been, subject to 2 year-averaging, the period ended 6 April 1996. Overlap profits are those arising in the period beginning after the end of the basis period for 1996/97 (ie the period beginning 7 April 1996) and ending before 6 April 1997 (ie 5 April 1997). If the Inspector is trying to argue that 5 April and 6 April are one and the same, refer him to a calendar (and to another Inspector with some technical knowledge)!

Thanks (0)
avatar
By User deleted
04th May 2005 16:43

Thanks Malcolm and David for your helpful replies. great to know that my view was right and I can go back to the Inspector with confidence.

Thanks (0)
avatar
By AnonymousUser
04th May 2005 10:40

On the presumption...
...its a 5th April year end and always has been then I believe the Inspector is correct. If the yer end if 6 April ie the maximum possible delay between making the profit and paying the tax has been made and almost a full two years will be taxed in 04/05, then I believe all but one day of the profit assessed in 1997/98 will be available as transitional overlap relief. Its been quite a while since I had cause to look at it but I think that transitional overlap relief was calculated based on the profit arising pre 6/4/97 but taxed in 1997/98 - I think !!

Thanks (0)