What level of mistake merits re-doing previous year's tax returns?

What level of mistake merits re-doing previous...

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I've found a error on 2012/13 for £500 on a partnership. Gross income is £250k, with profits of £55k. Is there a level at which it is excusable not to correct in the year, but to adjust in the following one? I obviously don't want to have to correct 4 returns...

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By johngroganjga
08th Sep 2014 13:29

Wouldn't dream of correcting it until you do the next return.  Is it an error in the accounts or in the computations?

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Replying to CW2012:
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By RG
08th Sep 2014 13:40

In the accounts

Motor expenses too high

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By johngroganjga
08th Sep 2014 13:50

So an over-accrual?  Or an

So an over-accrual?  Or an inadequate prepayment?

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By RG
08th Sep 2014 14:08

A miscalculation

Looking at the figures again, the one last year was wrong, and can't be justified. Therefore maybe the whole thing does need amending...

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Replying to neiltonks:
By johngroganjga
08th Sep 2014 14:44

?

RG wrote:

Looking at the figures again, the one last year was wrong, and can't be justified. Therefore maybe the whole thing does need amending...

Not sure what this means.  "the one" what was wrong?  What I'm getting at is if this was a simple accounting error that will reverse itself automatically next year that's even more reason for not creating unnecessary work.

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By Kevin
08th Sep 2014 14:12

CTA Guidance

I tend to follow the CTA guidance when it comes to previous year amendments (5.14): http://www.tax.org.uk/Resources/CIOT/Documents/2013/12/Jointprofessionalconductinrelationtotaxation2011.pdf

As a general principle all known irregularities should be corrected unless they can be disregarded in accordance with guidance in paragraphs 3.6 – 3.8. However members should exercise judgement over whether the cost of remedying the error might exceed the tax involved. In the opinion of the professional bodies it is reasonable for a member to take no steps to advise HMRC of isolated errors where the tax effect is no more than minimal, say up to £200, as these will probably cost HMRC and the client more to process than they are worth to the Exchequer.

 

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Replying to lionofludesch:
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By RG
08th Sep 2014 14:25

Thanks

That's what I was looking for.

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By thomas34
08th Sep 2014 14:56

£500

Sounds as if it won't come out in the wash this year and just be a timing difference. I'd just debit drawings and credit motor running in the current year so that the cumulative taxable profits will be correct.

 

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