The company had been dormant for 2 years with an accounting reference date of 30 June. Started trading and first invoice issued in September 2010, HMRC informed that trading started in September 2010. (although work had been done prior do this but not invoiced till completed in September)
It was agreed that it would be best if the the company's year end coincided with my clients other self employment and the ARD was changed to 31 December. (following period therefore being a 6 month one.July 2010-December 2010)
I am now starting to compile the online corporation tax return and have been presented with an accounting period of September 2010 - 31 December 2010 from HMRC. The following online pages give the opportunity to change the accounting period dates and I would like to change them to start on 1 July 2010 rather than September 2010. Before I go any further would appreciate advise as to whether this is correct.
I am inclined to amend the start date to 1st July and also to write to HMRC to explain the fact that we entered September as being the date my client issued his first invoice but he had in fact incurred expenses and worked towards that invoice for several months previous. (as actually was the case)
Would this be the best way forward or is it not necessary to write to HMRC as it won't make any difference to the taxable profits etc.
I have very few company clients and this is the first time I have come across a company starting after a period of dormancy so would appreciate any guidance.
Many thanks
Brian
Replies (3)
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Statutory & CT Accounting Periods
Statutory accounts:
Trading started when the company first started the work "several months previous" to the invoice in September. If "several" is more than 3, dormant accounts should not have been prepared for the year to 30.06.10. Also, why were accounts prepared for 6 months to 31.12.10 when they could have been prepared for 18 months to 31.12.11?
CT Accounting Period:
A CTAP (and the CT600 company tax return for that CTAP) start on the commencement of trading and end on the statutory accounting date or 12 months later if sooner. If you have stated that trading started in September 2010 and statutory accounts have been prepared for the 6 months to 31.12.10, it is correct that the company's first CTAP and CT600 run from September to 31.12.10.
Reassurance?
If work started on (say) 7th July, your first CTAP runs from 07.07.10 to 31.12.10.
HMRC's CT system has been made flexible with regard to CTAPs. If you use third party software and I assume, the same applies to CT Online, you can submit CT600 returns for CTAPs with different dates to those held on the system per the CT41G (or per previous CT600s, if you have changed the accounting date in later years). There is no need to write a letter or attach anything to explain why you are submitting a CT600 for the period 07.07.10 to 31.12.10, rather than for 01.09.10 (if that is the date you put on the CT41G) to 31.12.10.