Share this content
53

Can I prepare an 18 month income statement for tax

Does HMRC allow 18 months income statement for Self Assessment?

Didn't find your answer?

I started a small bitcoin mining and cryptocurrency trading ventures in December 2017 as a sole trader or self employed. I did not include this on my Self Assessment for tax year 2017/2018 (05 April 18). The mining is still in operation. 

Can I prepare an 18-month income statement for my Self Assessment tax year 2018/2019? And claim AIA?

Replies (53)

Please login or register to join the discussion.

avatar
By Matrix
22nd Oct 2019 07:04

No

Thanks (0)
avatar
By Matrix
25th Oct 2019 06:49

Deleted

Thanks (0)
By SteLacca
22nd Oct 2019 08:01

You can amend your 2018 Return, with due regard to the correct commencement provisions.

Thanks (1)
Replying to SteLacca:
avatar
By bounce100
23rd Oct 2019 19:55

Thanks very much. You are right

Thanks (0)
avatar
By daniel_
22nd Oct 2019 10:14

No. The 2017/18 return should include trading from Dec 2017 until 05/04/2018.

2018/19 will depend on when you make your accounts up to. If it's an 18 month period then you won't have an accounting period ending the tax year so you would time apportion 12 out of 18 months of the accounts in 2018/19.

Probably better to prepare accounts to align with the tax year, especially if you have profits in either of these two periods as this way you can avoid overlap profits.

Thanks (1)
Replying to daniel_:
avatar
By Accountant A
22nd Oct 2019 11:30

daniel_ wrote:

make your accounts up

Good choice of words in the circumstances, I suspect!!

Thanks (0)
Replying to daniel_:
avatar
By bounce100
22nd Oct 2019 23:01

if i were to apportion the accounts as suggested which of the below will be correct:
(a) by preparing an income statement for the first 12 months i.e. from 1 December 2017 to 31 November 2018. Then prepare a second income statement from 1 December 2018 to 5 April 2019
(b) prepare an income statement from 1 December 2017 - 5 April 2018. And then prepare a second income statement for 6 April 2018 - 5 April 2019

And what will happen if I were to make a loss in both tax years?

Thanks (0)
Replying to bounce100:
avatar
By bounce100
23rd Oct 2019 19:57

plan (b) is the way. So I will amend tax return 2017/2018 for the burden. And the report 2018/2019 as usual.

Thanks (0)
avatar
By Tax Dragon
22nd Oct 2019 10:23

On what basis have you concluded you are trading?

Thanks (0)
Replying to Tax Dragon:
By ireallyshouldknowthisbut
22nd Oct 2019 12:24

The mining is probably trading. The 'trading' might or might not be, you would need to look at the whole activity.

Thanks (0)
Replying to ireallyshouldknowthisbut:
avatar
By Accountant A
22nd Oct 2019 12:35

ireallyshouldknowthisbut wrote:

The mining is probably trading. The 'trading' might or might not be, you would need to look at the whole activity.

Tax Dragon wrote:

On what basis have you concluded you are trading?

I think the OP is on top of all that detail. He's a clever Bitcoin trader making millions. We are boring accounting drones giving free advice.

Thanks (0)
Replying to Accountant A:
avatar
By Tax Dragon
22nd Oct 2019 12:46

Accountant A wrote:

We are boring accounting drones giving free advice.

Not me mate. I was just asking a question. (And the OP doesn't sound to me to be on top of anything.... ahh, you were being sarcastic.)

Thanks (0)
Replying to ireallyshouldknowthisbut:
avatar
By Tax Dragon
22nd Oct 2019 12:44

Mining can amount to trading, sure. Equally, it can not amount to trading, as I'm sure you know. Hence the question.

Thanks (0)
Replying to Tax Dragon:
avatar
By bounce100
22nd Oct 2019 23:02

HMRC deem mining an income.

Thanks (0)
Replying to bounce100:
avatar
By Tax Dragon
23rd Oct 2019 06:44

Indeed. But not necessarily trading income. On what basis have you concluded you are trading?

Thanks (0)
Replying to Tax Dragon:
avatar
By bounce100
23rd Oct 2019 20:19

Taking into account the degree of activity, organisation, risk and commerciality, it is certainly not a miscellaneous income but a trading activity.

Thanks (0)
avatar
By The Dullard
22nd Oct 2019 11:42

Yes. You can do that, if you want. Hope you like getting your @r5e kicked.

Thanks (3)
Replying to The Dullard:
avatar
By bounce100
23rd Oct 2019 21:10

A typical "Dullard" @r5e response from The Dullard.

Thanks (0)
avatar
By bernard michael
22nd Oct 2019 14:27

The problems come when he makes losses.

if he's trading then he may be able to use them. If not not

Thanks (0)
Replying to bernard michael:
avatar
By bounce100
22nd Oct 2019 23:05

If I make losses I am sure I should be allowed to adjust it my other sources of income.

Thanks (0)
avatar
By Bob Loblaw
22nd Oct 2019 16:47

Just do whatever. HMRC won't check or query it. Sometimes I draw accounts up to 31 March, sometimes I draw them up to exactly 6:03pm on the third Friday of June. Sometimes I make them up for the last 16 months and included an arbitrary estimate for the next 3. Create some juicy overlap to baffle and confound me at a later date when the rum runs out and I pull my head out of whichever public toilet it landed in. It just depends on how frisky I'm feeling at any given moment.

Thanks (0)
avatar
By Tax Dragon
23rd Oct 2019 06:50

I would politely suggest that, if you are doing this seriously and for profit, then you hire yourself an accountant.

For one thing, it's pretty obvious that you are mentally using the cash basis (without even being aware of such a thing). That might not be best. For another, there's no chance of you getting it right without help.

If you're not going it seriously and for profit, you can if you want forget the accountant - but you're not trading and won't get any relief for losses.

Thanks (0)
Replying to Tax Dragon:
avatar
By bounce100
23rd Oct 2019 08:03

I have prepared my profit and loss statement on an accrual basis. I can't afford an accountant at the moment as mining has been really unprofitable. I guess with an A-level education in financial accounting and costing I should do well in ascertaining the correct figures and applying the accounting concepts.
Is the legal framework or how HMRC wants things to be done, I am trying to understand.

Thanks (0)
Replying to bounce100:
avatar
By JoF
23rd Oct 2019 08:56

''I can't afford an accountant''

No, but manners cost nothing. Not a single please or thank you in sight.

A level accountancy doesn't cover tax treatment and you seem to be missing some heavy hints, so I would suspect it will cost you more to do DIY than to pay an Accountant.

Thanks (2)
Replying to JoF:
avatar
By bounce100
23rd Oct 2019 09:17

The site allows you to thank people. And I have thanked anyone with a useful response.

If you can't SEE "THANKS" insight, then "SpecsSavers"

Of course, A-level accountancy doesn't cover tax treatment. That is why I am on this forum for help. And besides, HMRC only released its position of mining cryptocurrency in December 2018.

Thanks (0)
Replying to bounce100:
avatar
By JoF
23rd Oct 2019 09:47

The thanks only appeared after I posted though!

This forum is for Accountancy professionals not freeloaders who do not listen to the advice given. Or ones who cannot read between the lines/interpret scarcasm.

Hmrc's position!! Says it all.

Thanks (2)
Replying to JoF:
avatar
By bounce100
23rd Oct 2019 10:30

Ok, didn't know this site is for accountants only. But that is not quite right. Because the google ads displayed are retargeting me based on my interest online. And when I see and/or click it the site makes revenue. Therefore I am not a freeloader. And in fact, I have clicked some them.

Also, the question I ask and the answers provided are learning resource to the accounting, tax and business community. Varying answers and advice have been provided. Accounting is an art, not a definite science so I am here exploring.

I get your sarcasm. It seems you didn't get mine.
I enjoy preparing my own accounts. And learning from the pros. Maybe someday, I will complete my ACCA.

I have to get an accountant - I get you.

Thanks (0)
Replying to bounce100:
avatar
By Tax Dragon
23rd Oct 2019 10:16

bounce100 wrote:

I get your sarcasm. It seems you didn't get mine.

You've bounced me into quite liking you. I'm a sucker for sarcasm. (Blackadder is superb.)

Thanks (1)
Replying to JoF:
avatar
By bounce100
23rd Oct 2019 21:05

"

"Your suspicion is one of the morbid reactions by which you as an organism defends yourself and seeks another equilibrium" ~ Nathalie Sarraute

"You don’t need to be an expert to navigate tax" https://www.gosimpletax.com/blog/can-tax-return-amended-filing/

HMRC website, Tolley Tax Guide on SA and Frank Wood Accounting 1&2 are invaluable resources.

Thanks (0)
avatar
By daniel_
23rd Oct 2019 07:15

Would be awfully nice to treat it as a trade, claim AIA on all that expensive and unprofitable mining rig (read: gaming PC) and claim income tax relief on the lot.

May as well claim new trader relief to carry it back 3 tax years too.

Thanks (1)
Replying to daniel_:
avatar
By bounce100
23rd Oct 2019 09:50

That is right. That is what I am thinking. Entering the mining in December 2017 was a bad idea, as the market had peaked. And because of that, the rig (GPU) and ASICs prices were highly inflated.
My problem is how to go about it. As I didn't report the mining loss in 2017/2018 (5 Apr 18) on my self-assessment. Purely because I was not aware of whether HMRC will even deem it as a business.
Now I am preparing my self-assessment for 2018/2019. Should I just carry the loss forward from 05 Apr 18.

Thanks (0)
avatar
By Tax Dragon
23rd Oct 2019 08:51

Wow. You spent a few hundred smackeroonies on a GPU.

You've convinced me you're self employed.

Not.

Thanks (1)
Replying to Tax Dragon:
avatar
By bounce100
23rd Oct 2019 09:07

I am.

Thanks (0)
Replying to bounce100:
avatar
By Tax Dragon
23rd Oct 2019 09:22

Then I suggest you find the funds to pay an accountant to help sort out the mess you are in the process of making.

Thanks (1)
Replying to Tax Dragon:
avatar
By bounce100
23rd Oct 2019 09:35

I guess I have to. Maybe some crypto specialist accountant. Geez, that is going to cost a lot of money!

Thanks (0)
Replying to bounce100:
avatar
By Tax Dragon
23rd Oct 2019 09:57

But save you a lot of penalties.

You've already (on your reckoning) submitted one incorrect tax return - and your proposed solution is to submit a second incorrect return.

Anyway, at least you have the sense to accept the advice.

Thanks (0)
Replying to Tax Dragon:
avatar
By bounce100
23rd Oct 2019 20:25

HMRC allows me till 31 January 2020 to make amendment on the 2017/2018 SA

Thanks (0)
Replying to bounce100:
avatar
By whitevanman
23rd Oct 2019 22:24

I suspect when you make your amended return, HMRC will open an enquiry (it seems from what you say that there will be a loss claim and that often attracts their attention). You will then discover that they do not readily accept that activities such as this amount to trading. It does depend on facts and the commentary they published in December last indicates the type of thing you would need to consider. Based on the little I know, few people in your position are likely to be trading, it simply isn't viable. Many estimate that the cost of electricity alone would exceed any income generated and you do have to compare your activity with, say, the warehouse type arrangement that real traders use.
In all this I think I can say I agree with others. Do nothing till you have consulted a knowledgeable, professional.

Thanks (0)
Replying to whitevanman:
avatar
By bounce100
23rd Oct 2019 22:55

It is definitely trading. I am honest. And I would welcome any scrutiny. It's not like I trying to hide. I have halted most mining activities now that crypto prices are low. But continue to use low electricity countries by shipping miners there

These costs have already happened, the evidence is available. I have done my double-entry accounts journals, ledgers, trial balance, profit and loss and in the process of balance sheet.

In the boom period, the cost of electricity was low. And I entered in the boom period. So the first 3 months was promising.

Thanks (0)
Replying to bounce100:
avatar
By bounce100
23rd Oct 2019 23:11

I surmise they don't allow depreciation on profit and loss account for tax purposes, owing to the capital allowance claim.

Thanks (0)
Replying to bounce100:
avatar
By whitevanman
23rd Oct 2019 23:13

No-one is suggesting you are dishonest, simply that you do not understand the legislation and (more importantly) case law on the subject, particularly about what is and is not trading. What you believe is hardly relevant.
Nor in fact can I or anyone else say categorically, that you are or are not trading. It depends on the facts and there will be very many such that have a bearing on the issue. So, I repeat what I and others have said, you really need to employ a competent, professional or suffer the consequences.

Thanks (0)
Replying to whitevanman:
avatar
By bounce100
23rd Oct 2019 23:43

I can't see any consequences here as far as I meet the 4 points. I don't know what I will say to myself if I pay an "expert" to tell me that the operation is trading. When I have already told myself that it is trading. And it is not like the expert is HMRC. HMRC may even differ on the "expert's" opinion.
There are a profit and commercial motive.
Part Financing a rig with other peoples money can't be miscellaneous income. This is not freelancing. Troubleshooting rigs, making miners efficient etc.. I am not talking about a laptop mining.

The legislation is plain simple.

Thanks (0)
Replying to bounce100:
avatar
By whitevanman
23rd Oct 2019 23:49

The fact that you say you meet the 4 points tells anyone who knows anything about the subject, that you are not one of their brethren. The stores (electronic and otherwise) of HMRC are filled with cases of people who knew as much as you and were equally wrong. But good luck (though clearly you will believe that luck will have nothing to do with it).

Thanks (1)
Replying to whitevanman:
avatar
By bounce100
24th Oct 2019 01:45

Not fair. If it booms and I make an extreme profit they want the tax. If it busts and I make a loss they don't want to know

Thanks (0)
Replying to bounce100:
avatar
By bounce100
24th Oct 2019 02:01

Maybe they should do what Portugal did: Bitcoin is not a taxable activity. If you make a profit, keep it. If make loss keep it.

Thanks (0)
Replying to whitevanman:
avatar
By bounce100
24th Oct 2019 13:51

Er .. just paid the next man from the other website to sort these things out. Guess he was wearing a suit, holding a laptop and telling me the same lines from HMRC so I consider him to be an expert.

Thanks (0)
Replying to whitevanman:
avatar
By bounce100
24th Oct 2019 11:29

The cost of electricity is relative. In March 2018, one ASIC miner of one crypto utility was generating £450 per day after deducting the cost of electricity (£5). Had about 2 of this in stock of other miners. By April 2018, this miner was making only £20 a day after electricity. Now it makes £2 a day.

The profitability starts diminishing so quickly as more miners join. So the tweaking for efficiency starts - in essence a miner now has to find way to compete so they can pay electricity and make a profit.

What do you call this? At one point it appears you can live off it. The industry is still a new kid in the block.

Thanks (0)
By JCresswellTax
24th Oct 2019 09:34

Well this thread is extremely boring.

Thanks (0)
Replying to JCresswellTax:
avatar
By Tax Dragon
24th Oct 2019 09:40

Boom boom.

Took me a beat to get that one.

Thanks (0)
Replying to JCresswellTax:
avatar
By bounce100
24th Oct 2019 10:46

There are two kinds these days: the bored and the bores.

Thanks (0)

Pages

Share this content