Previous Year Corp Tax adjustment

Previous Year Corp Tax adjustment

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HI,

Could somebody please help me to understand how to post and adjustment to corporation tax provision which should have been posted for previous year but never has been posted.

 correct  journal entry will be D 3100 Reserves

                                              C 2320 Ctax Creditor

But I don't understand where to post it after the year end has been processed.

If I process it the same way I think it will change the reserves figure comparing to previous year broad forward.

Any suggestion how to fix it will be much appreciated.

Best regards,

Mag

Replies (14)

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By johngroganjga
24th Jul 2015 06:01

Your debit is in the wrong place. You debit the current year's tax charge.

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Replying to Tax Dragon:
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By Mag8891
24th Jul 2015 10:31

could you please advise what shall I debit to correct this?  which nominal code on sage if possibe?

 

Many thanks

Best regards,

Mag

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By johngroganjga
24th Jul 2015 10:41

No idea I'm afraid.  Like I

No idea I'm afraid.  Like I said it's the CT charge, which I would not have thought would be too difficult to find on your chart of accounts.  It's where it would have been posted to last year if it had not been overlooked.

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By 0680727
24th Jul 2015 12:25

If this was included in the annual stat accounts for the previous year and you have now processed the year end on the accounting package and cleared out the profit and loss codes then it is appropriate to debit to the profit and loss account reserve to correct reserves brought forward. You should process it with the last year end date

If it was not include in the stat accounts last year then debit the corporation tax code in the P&L range and date it in the current year.

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Replying to IANTO:
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By Mag8891
24th Jul 2015 13:10

Provision for CTax  has not

Provision for CTax  has not been posted on Sage and done the year end.

I think I have second option, could you please tell what is sage code for CTax on PL account, is it something like 9001,

 

Will this then reduce the profit of the current year for the amount of the adjustment - it confuses me? or am I getting it wrong?

 

Many thanks.

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Scalloway Castle
By scalloway
24th Jul 2015 13:33

Tax reduces P&L b/f

This is a problem with Sage. Once the year is closed down you can't go back and amend the ledger for previous year entries. You can only do the Balance Sheet entries to bring the Sage balances into line with what was submitted to Companies House.

 

So the correct  journal entry is Dr 3100 Reserves

                                              C 2320 Corp tax Creditor

 

Then debit 2320 when the tax is paid.

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Replying to SA2016:
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By Mag8891
24th Jul 2015 13:40

Yes, but for the previous year shall I post it within current year date or with previous year end date?

I think it will change the reserves broad forward and won't agree with previous year accounts.

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Scalloway Castle
By scalloway
24th Jul 2015 14:50

Accounts filed with Companies House

Was the Corporation Tax payable included in the accounts filed with Companies House?

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Replying to Wilson Philips:
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By Mag8891
24th Jul 2015 16:01

no, totaly missed to include ctax on sage and accounts, however, correct CTax return has been filed and paid in the following year.

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Replying to Wilson Philips:
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By Mag8891
24th Jul 2015 16:03

if I put an adjustment this year, to show the missed CTax, then it would reduce profit after tax this year for this year tax + previous year tax.

Will it be correct to process it this way togerther with the notes saying that previous year tax has been included this year?

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Scalloway Castle
By scalloway
24th Jul 2015 16:15

Previous Year Adjustment

The previous year's tax could go to a Previous Year Adjustment account.

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Scalloway Castle
By scalloway
24th Jul 2015 18:50

9001 seems to be the Sage code for Corporation Tax. My thought would be to use 9002 for the previous year adjustment account so you don't change the balance sheet figures.

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By petersaxton
24th Jul 2015 20:29

Amend accounts?

Should the accounts be amended? I would assume the error is material.

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