opening years calculations - self assessmt

opening years calculations - self assessmt

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In tax study manuals, "special rules" for the opening years are stated.

IR appears to accept "actual" to coincide with tax year
ie Yr1 up to april 5
yr2 apr 6 - april 5
etc

I haven't seen this "actual" basis in my study guides....do practitioners use actual?

any comments gratefully received
John
John

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By AnonymousUser
27th Apr 2005 16:02

Same as saying CYB
If a 5 April period end is chosen for the first period of trade then the 'actual' becomes the same as CYB (Current Year Basis) and yes I do have clients on this basis.

So really its nothing different.

Having a 5 April year end keeps things simple but there can be cash flow advantages to be had (from a payment of tax point of view) by having a different year end if profits are low in early months and then creep steadily upwards.

Hope this helps.

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By AnonymousUser
28th Apr 2005 13:55

Happy to help - but what is the Q?
Not sure I understand your question.
Apart from treating 31/3 as the same as 5/4 I have not come across the R 'accepting any change to the actual trading dates.
Can you reword your Q perhaps putting in dates and I'll try to answer it
Regards
Martin

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By User deleted
28th Apr 2005 15:04

ok here goes!
hopefully this will be clearer!

usual opening year rules would be:
yr1 from start of business say Nov to april 5 (or 31/3)
yr2 would be first 12 months (from Nov)


"actual" ie keeping in-line with the actual tax year (or 31/3), so,

yr1 as above
yr2 6april-5april (will allow 31/3 as end date)
...and continuing......This method then seems to remove the problem of overlap profits.

I've had it confirmed by IR helpline that it's ok to do this, but wondered why I hadn't seen it in the tax study manuals that I've looked at! Hence, just asking for confirmation from practitioners to see if it's common...many thanks


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