I have one client who I didn't have any overlap relief figures for. HMRC have sent me the following - and I am just going round in circles to calculate the correct figure. Is it as simple as 1/12 of £4,153, the other figures are red herrings, and I am just over thinking it?Any help/pointers would be most appreciated.
- The 1997-1998 basis period dates are 01/11/1996 to 31/10/1997
- Capital Allowances are £0.00 and Balancing Charges are £0.00
- Net Profit for tax is £3,729
There was a change in the accounting and basis period dates during 2002/2003 and I have provided the following information from both the 2001/2002 and 2002/2003 self-employment pages detailing the change:
2001/2002
- Basis period dates are 01/11/2000 to 31/10/2001
- Net Profit for tax is £6,084
2002/2003
- Basis period dates are 01/11/2001 to 31/12/2002
- Net Profit for tax is £4,153
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Replies (16)
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Don't really follow your layout/info but without thinking/asking you further I'd've thought it's 3/12ths of £3,729.
It was 5/12 of £3729 in 1997/98 and 2/12 of £3729 should have been used in 2002/03, leaving 3/12 to carry forward to 2023/24.
Properly done in days, of course, rather than months.
Dunno where you got 1/12 from or why you think the £4153 are the profits to be used.
...and 2/12 of £3729 should have been used in 2002/03...
Don't forget that if you didn't/forgot to use this in 2002/03, you can use it in 2023/24 instead
lionofludesch wrote:
...and 2/12 of £3729 should have been used in 2002/03...
Don't forget that if you didn't/forgot to use this in 2002/03, you can use it in 2023/24 instead
Never thought of that. Though it would never have occurred to me to forget to use it.
Do you have a statutory reference for that?
Sorry, took me a little while to find it. It's para 68(b) Sch 1 FA22:
"68. References in this Part of this Schedule to a “deduction for overlap profit allowed under this Part of this Schedule” are to (a) any deduction for overlap profit that would be allowed under section 205 of ITTOIA 2005 (deduction for overlap profit in final tax year), were the trader to have permanently ceased to carry on the trade on 5 April 2024, or (b) any deduction for overlap profit allowed under section 220 of that Act (deduction for overlap profit on change of accounting date) for a tax year before the tax year 2023-24 but not made for that earlier tax year (or any amount of such a deduction not made)."
There's a bit on it in BIM81270
Thank you all -I think that HMRC gave me too much information, and I sort of felt obliged to use it all ;-)
If you'd been shortening the period in 2002/03, you'd've created more overlap which would have been based on current profits.
If you'd been shortening the period in 2002/03, you'd've created more overlap which would have been based on current profits.
Yes - and more specifically, based on your 2001/02 profits. That's why they've been provided - it's probably safer and simpler to provide the details from the year before a change in all cases, rather than just where the period is being shortened.
lionofludesch wrote:
If you'd been shortening the period in 2002/03, you'd've created more overlap which would have been based on current profits.
Yes - and more specifically, based on your 2001/02 profits. That's why they've been provided - it's probably safer and simpler to provide the details from the year before a change in all cases, rather than just where the period is being shortened.
True - but, as the period was lengthened all she needed to know was how much it had been lengthened by.
Neither I nor the client have the any idea why the year end was changed once let alone twice, and the previous accountant (now long since deceased), provided very sketchy handover info about 20 years ago, and nothing about any overlap relief.
Neither I nor the client have the any idea why the year end was changed once let alone twice, and the previous accountant (now long since deceased), provided very sketchy handover info about 20 years ago, and nothing about any overlap relief.
Well, one of those times would be mandation (the one to March).
The other, the only voluntary one, would probably be because folk see something magic about December and March year ends.
.......and nothing about any overlap relief.
You could have asked.
Twenty years ago would only be a few years after it was created.
I did ask, but never got a reply :-/
I had a similar scenario. I was told there wasn't any. I asked HMRC (this was around 2003, when they had staff and weren't so busy answering questions about overlap relief.) and they said it was £10,050.
Worth about £3000 in tax and Class 4 to the client.
Nothing clever about it. It's just persistence. Anyway, you got there in the end.