Problems with my basis period for first year of trading.

Problems with my basis period for first year of...

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I started business as a sole trader on 1st March 2015. This means my year end is 28 Feb 2016. I realise my basis period for the first year runs from 1/3/15 to 5/4/15, but from memory (I did ATT many years ago) I need to prorate my earnings from my first set of accounts. My problem is my year end is after the filing deadline of 31st Jan 2016 for the 15/16 tax year.

Do I use the actual trading figures from beginning the business to the end of the first tax year? With setup costs this would create a big loss so I would claim early loss relief, however as the business got going it broke even and now by end of Feb I will be in profit which if prorated using the first year rules would produce a small profit instead of a big loss, but if I wait until Feb I would incur a filing penalty of £100 as the deadline would have pasted.

I know I am missing a piece of logic somewhere?

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By Tim Vane
24th Nov 2015 10:05

Well, the first piece of logic you are missing is that you should have appointed an accountant to deal with your affairs. They might have suggested that you choose an accounting date of 31 March, which not only gives you a very simple basis period each year but has the bonus of making your first BP the same as your first month of trading. An accountant would also make other suggestions that you would find useful in the long run.

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By vince8
24th Nov 2015 10:08

Change

You do not need a 28/2 year end. Run the accounts to 5/4/15 and claim the losses now.

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