5th April

5th April

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We are the only major economy to have a mid-month date for the end of the tax year. All others are calendar or quarter end. We're not even consistent across all taxes: CT is 31st March, IT, NI and CGT is 5th April. We all know the history of why we have 5th April. But that is no reason to retain such an archaic date. So why aren't we campaigning to align the dates of CT and individuals' taxes? I want to start a debate. What do you think? If we were to change the tax year for individuals, should we align with CT 31st March. Or should be change corporate and non-corporate taxes to a different date: calendar year?

Replies (82)

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Morph
By kevinringer
02nd Oct 2014 13:46

OTS

I have approached the OTS and had a reply from John Whiting. He said the OTS have recommended alignment to 31st March or 31st December but it has not been taken further because the Government believes the cost of change would be greater than the benefits. One of the biggest costs would be re-programming HMRC computer systems. It seems ironic in this age of technology and 'digital by default' that we are in fact being restrained because of the limitations of the Government's IT. But that is a whole debate by itself. Back to h 5th April campaign: the OTS is on our side.

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By Phil Rees
02nd Oct 2014 14:05

But

The Irish did it 20 odd years ago. If they can then surely we can?

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By petersaxton
02nd Oct 2014 14:21

Calendar year

No matter how many times I tell clients the personal tax year is 6 April to 5th April I regularly find they get it wrong or have to keep asking me.

Why not have a calendar year for all tax years and deadlines of 30 November - to avoid a rush over Christmas!?

What rubbish about HMRC systems. They should have avoided hard coding dates. One sensible improvement and it's done for ever.

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By claudialowe
02nd Oct 2014 15:01

Gets my vote

31 December year end - personal tax returns in by 31 October - I get to enjoy Christmas - where do I sign? :-)

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By Steve Kesby
02nd Oct 2014 15:15

People will be suggesting...

... that we should abandon the monarchy and let Scotland be independent if this sort of blue sky thinking continues!

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Replying to Moonbeam:
By petersaxton
02nd Oct 2014 15:25

Why not?

Steve Kesby wrote:

... that we should abandon the monarchy and let Scotland be independent if this sort of blue sky thinking continues!

Can't the rest of the UK have a referendum to see if we can kick them out?

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Replying to lionofludesch:
By Ruddles
02nd Oct 2014 16:46

???

petersaxton wrote:

Steve Kesby wrote:

... that we should abandon the monarchy and let Scotland be independent if this sort of blue sky thinking continues!

Can't the rest of the UK have a referendum to see if we can kick them out?

At risk of starting another interminable thread, such rhetoric has no place here. All I would say is that if England wants to hold a referendum to determine whether they want to leave the UK they should be given the same opportunity as the Scots. England leaving the UK? Now that would be an interesting currency debate.

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Replying to lionofludesch:
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By carnmores
06th Oct 2014 12:45

@Peter

do you mean Scotland or the monarchy or both !

anyway the first to go would be Ulster or if you prefer Northern Ireland

and while we are on this subject how about selling Gibralatar to Spain / EU and it they dont want it lets sell it to the chinese on a long lease , that should clear the deficit :-)

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Replying to Munch:
RLI
By lionofludesch
06th Oct 2014 13:30

Why ?

carnmores wrote:

do you mean Scotland or the monarchy or both !

anyway the first to go would be Ulster or if you prefer Northern Ireland

Eh dear - poor old Northern Ireland.  I'll be there on my holidays next week. 

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By petersaxton
02nd Oct 2014 15:17

Claudia

Don't overdo it! What's wrong with 30 November? I assume you are wanting to keep the approximate 10 months to do the work.

 

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Stepurhan
By stepurhan
02nd Oct 2014 15:50

Transition year would be a [***]

No-one got most of their unincorporated clients on 31 March year ends to avoid overlap? Are you going to add overlap to their returns or get them to change year ends? Both of those have complications involved. Then you have all the apportionments of allowances etc for a short tax year. Payroll software would have to be reprogrammed to cope with the change for the short tax year, and then the new annual year. Not to mention the adjustments to the cumulative NIC calculations for directors.

The fact is, a lot of the tax system, for good or ill, is based on having a 12 month tax period. It is not just HMRC that would have a lot of work on their systems to deal with any change of date. Anyone know how the Irish handled the transition?

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Replying to jcace:
Morph
By kevinringer
03rd Oct 2014 14:12

SAT1 page 30

stepurhan wrote:

No-one got most of their unincorporated clients on 31 March year ends to avoid overlap? Are you going to add overlap to their returns or get them to change year ends? Both of those have complications involved.

When SA was introduced HMRC stated that we could treat 31 March or 1, 2, 3, 4 or 5 April as the 5 April - see SAT1 page 30. The same rule could be applied for the year of transition to 31 March so prepare a set of accounts 6 April to 31 March which is deemed to be 12 months so no overlap and full WDA etc. This would only be for a switch to 31 March.

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Replying to lionofludesch:
Stepurhan
By stepurhan
03rd Oct 2014 15:13

Still moved on

kevinringer wrote:
stepurhan wrote:

No-one got most of their unincorporated clients on 31 March year ends to avoid overlap? Are you going to add overlap to their returns or get them to change year ends? Both of those have complications involved.

When SA was introduced HMRC stated that we could treat 31 March or 1, 2, 3, 4 or 5 April as the 5 April - see SAT1 page 30. The same rule could be applied for the year of transition to 31 March so prepare a set of accounts 6 April to 31 March which is deemed to be 12 months so no overlap and full WDA etc. This would only be for a switch to 31 March.

kevinringer wrote:
stepurhan wrote:

Payroll software would have to be reprogrammed to cope with the change for the short tax year, and then the new annual year. Not to mention the adjustments to the cumulative NIC calculations for directors.

Payroll software has to deal with week 53 but HMRC cannot because week 53 employees receive P800s and demands for the 53rd week of allowances. So why not have a one-off week 51? HMRC's PAYE systems are much better at identifying overpayments so most employees should receive overpaid tax automatically. It will only affect weekly and some fortnightly employees: monthly/annual employees won't be affected if switch to 31 March.

Wow, it's like I never made the follow-up post making it clear I was talking about the much more significant change to 31 December instead of the minor change to 31 March. Is it REALLY too much to ask that anyone wishing to disagree with the points I'm making actually takes that into consideration? Or is it just easier to respond to a post without actually reading everything first?

Let me make it clear. I do not see a significant problem with alignment to 31 March (which is mostly accepted for tax purposes anyway) It is the later proposed change to 31 December that I think is more difficult than some seem to think.

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Replying to lionofludesch:
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By Gone Sailing
06th Oct 2014 14:53

I can live with that

kevinringer wrote:

When SA was introduced HMRC stated that we could treat 31 March or 1, 2, 3, 4 or 5 April as the 5 April - see SAT1 page 30. The same rule could be applied for the year of transition to 31 March so prepare a set of accounts 6 April to 31 March which is deemed to be 12 months so no overlap and full WDA etc. This would only be for a switch to 31 March.

[/quote]

I can live with that

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Replying to jcace:
Morph
By kevinringer
03rd Oct 2014 14:10

Weekly employees

stepurhan wrote:

Payroll software would have to be reprogrammed to cope with the change for the short tax year, and then the new annual year. Not to mention the adjustments to the cumulative NIC calculations for directors.

Payroll software has to deal with week 53 but HMRC cannot because week 53 employees receive P800s and demands for the 53rd week of allowances. So why not have a one-off week 51? HMRC's PAYE systems are much better at identifying overpayments so most employees should receive overpaid tax automatically. It will only affect weekly and some fortnightly employees: monthly/annual employees won't be affected if switch to 31 March.

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Replying to Samantha20:
RLI
By lionofludesch
06th Oct 2014 08:38

Not so again

kevinringer wrote:
It will only affect weekly and some fortnightly employees: monthly/annual employees won't be affected if switch to 31 March.

Quite a few pensions pay out on 1st of the month. The pensioners would have eleven months' pension and twelve months' alowance in the year of change.  It would affect them - probably beneficially but possibly not.

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By petersaxton
02nd Oct 2014 15:59

I agree there are issues to deal with

but they are a one-off and then things would be a lot better. I think people would understand a calendar year better. All the issues raised should be easy to program into software.

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By claudialowe
02nd Oct 2014 16:09

Petersaxton

Are you suggesting a sneaky extra month to submit tax returns?  But yes, I can live with 30 November and "just" December as an easy month :-)

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Replying to Syd:
By petersaxton
02nd Oct 2014 16:44

Why the fuss?

snickersinatwix wrote:

That the tax cost of giving everyone a full year's personal allowance for a period that was 5 days short of a full year was going to cost some unbelievable amount.

And how would you deal with the self employed who currently have a 5 April year end and suddenly find they have overlap relief as they now have a year end right at the start of the next tax year  instead of right at the end of the previous tax year.

The mind boggles just thinking about all of the problems it could create.  It would keep us all in paid work for years to come....

You can simplify the rules for five days. If not you make an adjustment to the personal allowance. You are not changing it by 5 days if you change to a calendar year. You are reducing the tax year to less than 9 months for one year. The income and expenses will be proportionately the same.

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Replying to Syd:
Stepurhan
By stepurhan
02nd Oct 2014 16:46

We've moved on

snickersinatwix wrote:
That the tax cost of giving everyone a full year's personal allowance for a period that was 5 days short of a full year was going to cost some unbelievable amount.

And how would you deal with the self employed who currently have a 5 April year end and suddenly find they have overlap relief as they now have a year end right at the start of the next tax year  instead of right at the end of the previous tax year.

The mind boggles just thinking about all of the problems it could create.  It would keep us all in paid work for years to come....

Delightful as your sarcasm is, it would probably be better if you'd taken on board that most people are now talking about moving to a calendar year, not just 31 March. I hope you agree that a change of 3 months, as opposed to 5 days, would be rather more significant. I know it was that proposal that I was commenting on.
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Replying to Tax Dragon:
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By emanresu
03rd Oct 2014 12:39

..

stepurhan wrote:
most people are now talking about moving to a calendar year, not just 31 March. I hope you agree that a change of 3 months, as opposed to 5 days, would be rather more significant. I know it was that proposal that I was commenting on.

More significant and potentially disastrous.  Surely mayhem will be the result of having such a critical date set at such a disrupted time of the year.

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Replying to foxtrot:
By petersaxton
03rd Oct 2014 12:57

Why?

emanresu wrote:

stepurhan wrote:
most people are now talking about moving to a calendar year, not just 31 March. I hope you agree that a change of 3 months, as opposed to 5 days, would be rather more significant. I know it was that proposal that I was commenting on.

More significant and potentially disastrous.  Surely mayhem will be the result of having such a critical date set at such a disrupted time of the year.

It doesn't mean that the work has to be done at that time of the year.

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Replying to foxtrot:
Morph
By kevinringer
03rd Oct 2014 14:20

It's ok for Germany, Russia, China, Brazil, Japan ...

... and numerous more minor economies.

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Replying to blackdust567:
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By adam.arca
03rd Oct 2014 18:26

.

kevinringer wrote:

... and numerous more minor economies.

That's a comparison, not an argument!

Plus in my book the moral of that comparison is that we should stay different.

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By petersaxton
02nd Oct 2014 16:31

If small companies have to be submitted by 30 September

then you have two months to deal with personal tax stragglers. Isn't that better than one month?

Or do you want TWO "easy months"!?

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By claudialowe
02nd Oct 2014 16:41

Well..........

Two easy months - perhaps like the current February and March - would be nice, but I can live with one, as a trade off for having an extra 30/31 days to complete the rest of the year's work

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By adam.arca
03rd Oct 2014 12:33

Should it change? No........o..........o..........o..........o

Granted that history shouldn't be a straightjacket but nor should it be consigned to the dustbin just because it isn't "logical" (whatever that means) or because something needs "aligning" (which is nearly always a euphemism for let's hide a really major change as something small and inconsequential).

The fact the OTT even suggested this when there are much more pressing concerns just shows how useless they are. Off the top of my head (just because I am wrestling with it this morning), wouldn't the abolition of all the ridiculously complicated capital allowance rules and their replacement by making depreciation a tax allowable expense be a much more worthwhile target for reform?

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By petersaxton
03rd Oct 2014 12:56

No

"wouldn't the abolition of all the ridiculously complicated capital allowance rules and their replacement by making depreciation a tax allowable expense be a much more worthwhile target for reform?"

Every business would depreciate at 100% (or more!) each year.

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Replying to paulinleeds:
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By adam.arca
03rd Oct 2014 13:06

Well obviously..

..there would have to be some rules on acceptable depreciation rates for tax purposes.

Personally, I would have thought this was a winner for a cash-strapped government. Abolish 100% AIA claims and not allow businesses to disclaim WDA would result in higher profits (or wasted allowances) and more short-term tax take. Maybe not as easy to sell politically, however.

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By petersaxton
03rd Oct 2014 13:51

But why?

The government wants to encourage investment so they allow different depreciation rates? A business has to use a combination of depreciation rates in their accounts depending on the rules for various periods?

Leave this with capital allowances I say.

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Replying to Tax Dragon:
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By adam.arca
03rd Oct 2014 18:24

Bizarre

petersaxton wrote:

The government wants to encourage investment so they allow different depreciation rates? A business has to use a combination of depreciation rates in their accounts depending on the rules for various periods?

Leave this with capital allowances I say.

It seems rather bizarre to me that you would rather keep all the incredibly complicated and senseless capital allowance regime but that you're in favour of a meaningless change to the year end which is pretty much a non-issue and causes very few real-life problems and where the costs of a change are surely going to outweigh the benefits for the short-term and probably the medium-term futures.

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By vras
03rd Oct 2014 14:51

5 April

No one seems to use the old quarter days (25 March, 24 June, 29 September & 25 December) anymore but use the month-ends.  April is a throw back to the old quarter days & calendar changes. They should have changed it then- before computers!

 

31 December would be easy to understand or even 31 March. By giving, say, four years notice, the programmers can get busy & make money - remember the Millennium Bug?. It's a one-off change, just as the change from prior year was. The personal allowance argument doesn't stack up either. We get an extra day every four years, so why not allow a one-off 5 day allowance for 31 March or 3/4 allowance for 31 December?

Let's do it and make the archaic dates history.

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Replying to BryanS1958:
Morph
By kevinringer
03rd Oct 2014 14:57

Hear hear

vras wrote:

Let's do it and make the archaic dates history.

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Replying to BryanS1958:
RLI
By lionofludesch
06th Oct 2014 08:32

Not so

vras wrote:

No one seems to use the old quarter days (25 March, 24 June, 29 September & 25 December) anymore but use the month-ends.  April is a throw back to the old quarter days & calendar changes. They should have changed it then- before computers!

Funnily enough, within the last month a client company has taken on a lease with precisely those dates.

I also have a flat management company with a 28th September year end.

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Morph
By kevinringer
03rd Oct 2014 15:23

@stephurhan

Sorry - I replied in order of AW emails having not read subsequent points.

Ignoring the pain of the switch, on an on-going basis for the future, what do you think would be the best date? 31 March, 31 December, 30 November have all been mentioned.

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Replying to Technica:
By petersaxton
03rd Oct 2014 15:40

Not 30 November

kevinringer wrote:

Sorry - I replied in order of AW emails having not read subsequent points.

Ignoring the pain of the switch, on an on-going basis for the future, what do you think would be the best date? 31 March, 31 December, 30 November have all been mentioned.

30 November was mentioned as a deadline to submitting personal tax returns.

31 March would be a relatively minor change but was only originally chosen for the proximity to 5 April. Despite this there would have to be changes to systems.

This leads me to believe that the best change would be to 31 December. 

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Replying to Technica:
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By adam.arca
03rd Oct 2014 18:15

Hang on, cart and horse

kevinringer wrote:

Ignoring the pain of the switch, on an on-going basis for the future, what do you think would be the best date? 31 March, 31 December, 30 November have all been mentioned.

Before you move on to which month to change the year end to, you have to:

1. Convince everyone there really is a problem with 5 April (admittedly, most responses seem to be in favour but that's always going to be the case with a proposal like this plus can hardly be construed as definitive)

2. Then you have to convince everybody that the change won't be a major inconvenience, that the Revenue will for once be able to handle an IT project (good luck with that one), and not least that the not insubstantial cost of this just in terms of consultancy and re-programming will be worth it

3. And only then should you be talking about alternatives for the year end and putting forward a case for one over the other and why they would all be superior in real life (as opposed to on paper) to what we already have

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Replying to DJKL:
By petersaxton
03rd Oct 2014 18:40

Explanations

adam.arca wrote:
kevinringer wrote:

Ignoring the pain of the switch, on an on-going basis for the future, what do you think would be the best date? 31 March, 31 December, 30 November have all been mentioned.

Before you move on to which month to change the year end to, you have to: 1. Convince everyone there really is a problem with 5 April (admittedly, most responses seem to be in favour but that's always going to be the case with a proposal like this plus can hardly be construed as definitive) 2. Then you have to convince everybody that the change won't be a major inconvenience, that the Revenue will for once be able to handle an IT project (good luck with that one), and not least that the not insubstantial cost of this just in terms of consultancy and re-programming will be worth it 3. And only then should you be talking about alternatives for the year end and putting forward a case for one over the other and why they would all be superior in real life (as opposed to on paper) to what we already have

I've just explained the problems with 1.

If you think HMRC have never been able to handle an IT project properly then the argument should be: why are they allowed to deal with IT? instead of arguing against progress because HMRC can't deal with it.

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Replying to nick farrow:
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By adam.arca
03rd Oct 2014 19:12

Good point

petersaxton wrote:

If you think HMRC have never been able to handle an IT project properly then the argument should be: why are they allowed to deal with IT? instead of arguing against progress because HMRC can't deal with it.

That's a very good point.

But let's be honest, no government ever really gets on top of just how sh*t the Revenue are in general or how spectacularly bad they are at IT. If this change of year end ever happened, the Revenue would just blag the government of the day as usual, and as usual the taxpayer would foot the bill and the profession would foot the hard work.

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Replying to Technica:
Stepurhan
By stepurhan
04th Oct 2014 12:40

Don't see the point

kevinringer wrote:
Ignoring the pain of the switch, on an on-going basis for the future, what do you think would be the best date? 31 March, 31 December, 30 November have all been mentioned.
Saying ignore the pain reminds me of my favourite part from Bored of the Rings. (a parody of Lord of the Rings). The Gandalf character returns after fighting the Balrog and is asked by the Fellowship how he survived the fall into the chasm, defeated the monster, got back out of the chasm and got back to them. His explanation begins "Once out of the chasm..."

I think the switch (of three months, not five days) would be a lot more painful than people think. I also don't think it would be a one-off with everything running smoothly afterwards. Given past IT disasters, does anyone really think we wouldn't be suffering fall out from such a change for some time to come?

But really I don't see why. 31 March and 5 April are accepted as interchangeable for most purposes anyway. About the only justification for a larger move I can see is that a calendar year makes it easier to know what year is being talked about. So essentially change it because people are too dumb to understand dating their accounts transactions correctly. The truly dumb are endlessly inventive, and switching to a calendar year won't stop them being dumb.

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By claudialowe
03rd Oct 2014 15:39

Kevin..........

My vote still goes for 31 December - I think that the 30 November date got slightly lost in translation as the date for SATR to be filed not for the end of the tax year.

 

 

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By petersaxton
03rd Oct 2014 18:37

Not bizarre

When did I say I would rather keep an "incredibly complicated and senseless" capital allowance regime? I said that we should keep capital allowances rather than switch the complications to depreciation. Somebody suggested that we should scrap capital allowances and go with depreciation. I pointed out that people who take advantage of depreciation rates to save tax. It was then pointed out that complications could be introduced into depreciation rates. My argument is to keep depreciation simple. I didn't discuss the details of the capital allowance rates. What do you think is "incredibly complicated and senseless" about capital allowances?

You think changing the year end from 5th April to 31 December is a non-issue. P11Ds are to 5th April whereas many accounts are to 31 March. People would get used to a calendar year whereas now they will say 2013 but you are not sure whether they mean personal tax year 2013-2014 or 2012-2013. You can explain countless times that the personal tax year is from 6 April - 5 April yet people still provide information to 31 March or even 30 April and they have been doing it for years.

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Replying to Jholm:
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By adam.arca
03rd Oct 2014 19:04

We're at cross purposes

petersaxton wrote:

You think changing the year end from 5th April to 31 December is a non-issue. P11Ds are to 5th April whereas many accounts are to 31 March. People would get used to a calendar year whereas now they will say 2013 but you are not sure whether they mean personal tax year 2013-2014 or 2012-2013. You can explain countless times that the personal tax year is from 6 April - 5 April yet people still provide information to 31 March or even 30 April and they have been doing it for years.

I don't think that moving the year end would be a non issue, on the contrary I think it would be a huge issue. What I meant was that having a 5 April fiscal year end is just not an issue IMHO and there are so many other problems which could and should be addressed first. Everything you mention above are minor inconveniences rather than problems.

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Replying to johnhemming:
Stepurhan
By stepurhan
04th Oct 2014 12:51

Misunderstanding

snickersinatwix wrote:
Stephuran - I was not being sarcastic.  I really don't know why you thought I was.
I read your post as sarcastically saying I was over-exaggerating the problems of a five day change. I see from this latest post that you actually think that even that change is a problem. Apologies for the misunderstanding.
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By petersaxton
03rd Oct 2014 19:36

Cost

Reducing the tax take by whatever wouldn't make a difference because the expenditure would be reduced by the same proportion.

If the period end was reduced from 5 April to 31 December then the PA would be reduced from £10,500 (in 2014-2015) to £7,767. Where's the problem?

It sounds like you think there would be riots like there was when the year end was changed from 25 March to 5 April because people thought their lives were being shortened.

If a government was really terrified about this they could hide it within a PA increase. They are increasing the PA anyway.

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By petersaxton
03rd Oct 2014 19:40

Minor inconveniences

Of course they are minor inconveniences. P11Ds for no good reason are minor inconveniences. If you were questioned why you were doing something silly and you said that it was left like that because it's too much hassle to do something more sensible people would think you were mad.

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By petersaxton
04th Oct 2014 11:32

So increase PA at same time

and nobody would complain.

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By petersaxton
04th Oct 2014 11:42

We must be wimps compared to Sweden

http://en.wikipedia.org/wiki/Dagen_H

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RLI
By lionofludesch
05th Oct 2014 13:59

5 April

We've had a 5th April year end since 1753 and it's worked OK. I like the eccentricity of it.

Has anyone ever seen a 1752 calendar ?  I kept mine as a souvenir.   Wednesday, 2nd September is followed by Thursday,14th September.  I can't remember why the Government chose such a random day to make the change.

And, of course, March 26th 1751 was only two days after March 24th, 1750 because the New Year started on the 25th.  All wonderfully eccentric.

Just to add to the confusion, Scotland had moved Ne'er's Day to January 1st in 1600...........

 

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RLI
By lionofludesch
05th Oct 2014 16:45

More recently

I have a few Sa'moan friends.  Sa'moa jumped back across the dateline a few years ago (2011)  and missed out 30th December completely. Thursday 29th December was followed by Saturday, 31st December

Bad luck if that was your birthday............

On the other hand, if you were around in 1892 and July 4th was your birthday, you had a two day celebration as that was the year Sa'moa moved eastwards over the dateline and gained an extra Monday. Not good for people who don't like Mondays, though.  :-((

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