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MTD, accrual basis

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I appreciate that this forum is primarily for accountants (I do read the forum in case I find any useful information but I am not personally an accountant) so please feel free to ignore but I am asking this more out of curiosity than anything.

When MTD is imposed on sole traders...what would happen to someone (like me) who uses the accrual basis but, as they bill/are paid in a foreign currency, do not know their precise figures until the date on which payment is received? Some clients pay up to 60 days after the invoice date. Would I be forced to switch to the cash basis?

Will there be a workaround?

Thanks for any ideas.

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By Paul Crowley
10th Nov 2021 10:51

Just submit the first four as they stand.
Do the proper accounts on the 5th report

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Replying to Paul Crowley:
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By leopoldo
10th Nov 2021 11:00

So, essentially, switch to a cash basis for the 1st four (i.e. only reporting invoices that have been paid) and then back to accrual for the final EOPS?

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Replying to leopoldo:
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By Tax Dragon
10th Nov 2021 11:11

Yes.

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Replying to Tax Dragon:
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By legerman
10th Nov 2021 16:21

Tax Dragon wrote:

Yes.

Does it have to be cash basis? Say you issue or receive an invoice on 30th June, and it is paid on 7th July, my assumption is that for accrual businesses that would be reported on the 1st quarter. Are you saying it has to be reported on the 2nd quarter?

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Replying to legerman:
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By Tax Dragon
10th Nov 2021 16:26

Nah, I'd go with you. (I think that's the difference between OP's "essentially cash basis" and the (legislatively strict) "cash basis".)

But there're folks in here will tell you it doesn't matter either way.

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By leopoldo
10th Nov 2021 11:25

Thanks, makes perfect sense.
I thought the extent of the discrepancy between the first 4 reported figures and the final report would be a problem. I also wasn't sure if payments on account would automatically change on an ongoing basis with each report and it would look like I was underreporting (and would be subject to interest charges).

If it's as simple as that it will not be a problem (although the whole process seems unnecessary).

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Replying to leopoldo:
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By Paul Crowley
10th Nov 2021 11:57

HMRC will not even read the first 4 reports
They serve no purpose other than to give rise to late filing penalties at the new rate of £200 a time once the points are too high

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paddle steamer
By DJKL
10th Nov 2021 12:19

You could of course book the sale at its sterling rate on date of sale and then deal with exchange gains/losses based on sums received, but frankly life is too short (unless you like that sort of thing)

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Replying to DJKL:
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By leopoldo
10th Nov 2021 13:03

I most definitely do not like that sort of thing haha

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By Leywood
10th Nov 2021 13:34

Thats how it should be done.

But DIYers just make it up so who cares.

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