Change of accounting date

Change of accounting date

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I want to change my accounting date which is currently 30/4 to 05/04. However the info I have read states that the accounts cannot be longer than 18 months. I don't see how I can do this. I have my accounts to 30/04/02 prepared and my accounts to 30/04/03. To make the adjustment on this year's tax return it would appear I should submit accounts from 01/05/01 to 05/04/03. This would be approx 23 months. I also have overlap profit from my first year of £5k do I just deduct this from the profit of the 23 months (if I am allowed to submit 23 months). I would be grateful if someone could help me out.
Thanks
Jen
Jen

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By AnonymousUser
11th Aug 2003 02:20

Change of accounting date longer than 18 months
You can submit accounts that are longer than 18 months, but tax has to be computed according to the old date. That is:

31.5.02 2002/2003 12/23 months profit

05.4.03 2002/2003 11/23 months profit less relief for all previous overlap profits provided calculations are made for overlap profit as well as overlap period. So you would get relief for the old £5K and the new 11 months as shown above.

05.4.04 2003/2004 12 months actual profit.

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By AnonymousUser
11th Aug 2003 07:22

Or to express it slightly differently
Jen

Recompute your accounts for the year to 30 April 2003 so as to exclude the final 25 days of April 2003. You then have two sets of accounts: Year to 30 April 2002 and 11 months to 05 April 2003. Neither is longer than 18 months. Complete two sets of self employment pages on your tax return. Calculate capital allowances for each period separately.

Add the two net taxable amounts together and enter these in the relevant box of just one of the self employment sections (usually the second period). Then deduct the overlap.

If you feel the need to change the date again within 5 tax years you will need a commercial justification if that (second) change is to be effective for tax purposes. I always thought that rule was a little unfair, by the way. If you had a sound commercial justification for the first change but not for the second, why should that be deserving of different tax treatment from someone with the same dates who has a sound commercial justification for the second change but not the first? Oh, well, perhaps someone reading this can enlighten me.

-1eyedjack

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