Sole trader accounting year runs 01/05/03 to 30/04/04 (first year of trading) so last years tax return basis period was 01/05/03 to 05/04/04 with overlap relif
On 30/04/04 his wife went into partnership with him, the accounting year was left at 30/04/04.
they have been sent a partnership return but what dates do I use and where? Also can I claim back the overlap relief due to the cessation of the sole traders business.
I know everyone is extremely busy at the moment but I would really appreciate if someone could help me out.
Caz
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Replies (6)
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What to do
In practical terms what you need to do is this;-
For the husband the basis period for 2004/2005 is the first 12 months i.e. 01/05/03 to 30/04/2004. If the full 12 months accounts details were reported on his 2004 return then on the 2005 self employment pages tick box 3.10 and complete boxes 3.74 to 3.98 only. Otherwise enter details for the first 12 months on the Self Employment pages and remember to show the overlap relief carried forward. Add an additional note that this business is now a Partnership with effect from 30/04/2004.
For the Partnership return tick box 3.10 and add a note to state that the first Partnership accounts will be prepared up to 30/04/2005. Complete the statement pages to include the partners details and enter the wifes date of commencement as 30/04/2004
On the wifes 2005 tax return enter her basis period on the Partnership pages as 30/04/2004 - 05/04/2005. You will need to enter an adjustment in box 4.8 (because box 4.7 is 0 as nothing on the PShip return)The adjustment should be the apportioned figure of her share of the profits to 30/04/2005 (apportion by the number of days) If you don't have final accounts to 30/04/2005 you will have to estimate this and tick box 23.2 on the main return. You will then need to lodge a repair to this return once the actual figures are known, and by 31/01/2007
Chris
Many thanks for your help Chris, unfortunately the accounts were prepared by the soon to be ex-accountant and I do not have sage as I do not do private work (my full time job keeps me busy enough).
You have left me in somewhat of a quandary as I spoke to the Inland Revenue today and they told me to use the 04/05 partnership figures for both the partners and carry forward the overlap relief from last year, do you think this is incorrect?
Sorry to keep bugging you.
The full facts
My sister and brother-in-law pay their accountant every month to do their bookkeeping and monthly management accounts, he therefore has had the accounts since their year end in April 05 so yes I do believe they have been seriously let down!!!
Thanks Chris
My will to live has been restored!!
Thanks for the help, I agree that preparing the accounts to 5 April would have been best but the accounts have been done on sage (not by me) and I have just been given the nominal activity from which I have done the financial statements, to alter it all and work to the year end 5th April would mean alot of work and I have great time constraints due to my work load.
Thanks again
Update
I have dug out my books and sorted out the cessation of the sole trader (it's amazing how quickly it comes back) but no joy with the dates for the partnership return (it must be buried somewhere in my grey matter!!!
Just had another thought, if the partnership did not commence until 01/05/04 should they have a partnership return for 04/05?
Sorry one more question
If my memory serves me right the figures used for the sole trader should be 03/04 as this is his second year of trading so should I use these figures or the 04/05 figures entered in the partnership return