Due to the impact of Coronavirus on my client's business and the way that SEISS is being taxed, it makes sense to go early on moving his self employment year end to the end of March instead of waiting for the Basis Period Reforms to come into force.
Historically, he has had a June month end and so the period to be included in the current tax return in 21 months. However, apparently I can only have a period up to 18 months on the Self Employment page of the SA100.
I feel like I should know this, but I don't!! How do I report it? I'm guessing I need to do Self Employment pages - one with a June year end and then a 9 month period to March. But can I just apportion the figures, or do they need to be actual?
Any advice much appreciated!
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12 month and 9 month periods are the way to go. Depending on your software, you may need to attach the 2nd period S/E pages as a pdf file to the return.
In the Rupert Grint case a few years ago, it was lost because the long period was apportioned on a pro-rata basis, so the change of year end didn't take effect.
Depending on your software, you may need to attach the 2nd period S/E pages as a pdf file to the return.
I'm a bit surprised by that. It may be uncommon but surely not unknown for a taxpayer to have two (or more) separate self employments so there ought to be a facility to submit two (or more) separate sets of self employment pages.
Thanks for the heads up on pro-rating it, although seems a bit ridiculous as it won't make any difference to the amount of tax payable as it's all being taxed in the same tax year anyway.
Thanks for the heads up on pro-rating it, although seems a bit ridiculous as it won't make any difference to the amount of tax payable as it's all being taxed in the same tax year anyway.
That's what Rupert Grint's accountant said but - them's the rules.
Yes - separate 12+9 month accounts are required. Two sets of Self Employed pages.
The only exception would be cessation of trade, which doesn't seem to be the case here.
As your client will be taxed on 21 months' of profit, there should be a claim for 9 months' of overlap relief (ie all but five days of it). I trust the overlap relief has been recorded in each years' tax return since the later of the year of commencement and the year of the introduction to the CY basis of assessment to make this task easy, assuming that the accounting date has never been 31/3 to 5/4.
Overlap profits ... no idea what they are. I did ask the previous accountant when I took the client on but they didn't have the information. I also tried HMRC, but apparently I need to write to them if I want them to go back further than 2013/14, so efficient as ever! Basis period reform ... what could possibly go wrong?!?
Overlap profits ... no idea what they are. I did ask the previous accountant when I took the client on but they didn't have the information. I also tried HMRC, but apparently I need to write to them if I want them to go back further than 2013/14, so efficient as ever! Basis period reform ... what could possibly go wrong?!?
I keep saying - write now if you don't know.
It's a bit rich to accuse HMRC of being inefficient when the blame lies with the client's former accountant in not knowing and not recording the quantum (if any) in the boxes provided by HMRC on the tax return form. Any why didn't you ascertain the position upon taking the client on? As lion implies, good accountants know the overlap position of all their SE clients with year ends that are not 31/3 to 5/4.. This is especially important with the proposed changes in basis periods. Make a diary note for Feb to plug all the gaps in your SE client's records.
There could, of course, be nil relief if initially there were losses. But you should have note of this so that you can tell the difference between no overlap relief and unrecorded overlap relief.
BTW are you sure that it makes sense to change y/e early; your client will miss out on the transitional reliefs? These might be of extra benefit if there is no or very little overlap relief.
It's a bit rich to accuse HMRC of being inefficient when the blame lies with the client's former accountant in not knowing and not recording the quantum (if any) in the boxes provided by HMRC on the tax return form. Any why didn't you ascertain the position upon taking the client on? As lion implies, good accountants know the overlap position of all their SE clients with year ends that are not 31/3 to 5/4.. This is especially important with the proposed changes in basis periods. Make a diary note for Feb to plug all the gaps in your SE client's records.
There could, of course, be nil relief if initially there were losses. But you should have note of this so that you can tell the difference between no overlap relief and unrecorded overlap relief.
BTW are you sure that it makes sense to change y/e early; your client will miss out on the transitional reliefs? These might be of extra benefit if there is no or very little overlap relief.
I agree. If you take over a client, why don't you know his overlap relief? Did you think you'd never need it? Did you ask the outgoing accountant? What steps did you take to find out? Most folks' overlap relief is worth thousands.
Start your research now.
As your client will be taxed on 21 months' of profit, there should be a claim for 9 months' of overlap relief (ie all but five days of it). I trust the overlap relief has been recorded in each years' tax return since the later of the year of commencement and the year of the introduction to the CY basis of assessment to make this task easy, assuming that the accounting date has never been 31/3 to 5/4.