Sole trader cessation accounts

Do I include the final 15 months of trade on the 2016/17 tax return or just 12 months?

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OK so my brain is frazzled from the January rush! I have got a sole trader who has incorporated and has two sets of accounts - one for the year ended 31st December 2016 (usual year end) and one for the 3 months ended 31st March 2017 (cessation). It was beneficial to split like this rather than a 15 month period in order to claim capital allowances in the 12 month period as we couldn't have otherwise claimed AIA in cessation period. Do I just include the 12 months ended 31st December 2016 on the 2016/17 tax return and the 3 months to 31st March 2017 on the 2017/18 tax return or do both periods go on the 2016/17 tax return as trade ceased before 5th April 2017? Thanks in advance.

Replies (17)

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JCACE
By jcace
23rd Jan 2018 20:24

Include both periods and claim overlap relief.

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Replying to jcace:
By Ruddles
23rd Jan 2018 21:59

Agreed - but it should have been obvious. Why would results for the period ended on 31 March 17 be included on the 17/18 return?

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Replying to Ruddles:
By johngroganjga
24th Jan 2018 07:57

I know it is not the case, but logically they might have been, because, but for the cessation, they would have been.

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Replying to johngroganjga:
By Ruddles
24th Jan 2018 09:22

Only if the accounting period to 31 March 2017 is the first period and there is a subsequent change of accounting date.

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By mickings
24th Jan 2018 07:56

I agree, that is what I thought but my software wouldn't allow me to update the tax return with both sets of accounts so I started to doubt myself!

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RLI
By lionofludesch
24th Jan 2018 07:59

It's not beneficial to split into a 12 and 3.

Overall, you'll get the same capital allowances, which will, ultimately, be based on closing or exit valuations.

If you can't work out how to use your software, stick everything into a 15 month period.

Job done.

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Replying to lionofludesch:
ALISK
By atleastisoundknowledgable...
24th Jan 2018 08:17

Quote:

Job done.

New phrase of the day?

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Replying to lionofludesch:
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By mickings
24th Jan 2018 09:19

Thanks but capital allowances wouldn't be the same for 15 month period because I am transferring assets to limited company at tax written down value. Therefore I can't claim AIA in last period of account and capital allowances are significant so it has to be a 12 and 3 month period in order to claim AIA in the penultimate accounting period. Would have been so much easier to just include 15 months otherwise!!

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Replying to mickings:
RLI
By lionofludesch
24th Jan 2018 09:31

Ah - you didn't mention that.

So are we now down to deciding how to enter it into your software ?

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Replying to lionofludesch:
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By mickings
24th Jan 2018 10:40

Sorry I thought I had said that in the original post but perhaps it wasn't clear enough!
Yes that's right. I can include the 12 months detailed trading P&L for 2016 then add an adjustment to the profit to arrive at the correct profit figure for the basis period (1st January 2016 to 31st March 2017) but there will be no breakdown of how this 3 months profit is made up. I am using Taxfiler

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Replying to mickings:
By Tim Vane
24th Jan 2018 11:05

Add 2 self employment pages, 1 for each accounting period. Why do you need to adjust the profit?

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Replying to Tim Vane:
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By mickings
24th Jan 2018 11:18

I can't seem to add 2 accounting periods for the same trade on one tax return ...perhaps it is a question I need to ask Taxfiler directly

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By Marion Hayes
24th Jan 2018 11:45

You cannot file two sets of trading pages electronically. You enter both into the software but only one is part of the return. The other is attached as a pdf file to the submission so yes. you need to talk to Taxfiler to see how they deal with the attachment

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By mickings
24th Jan 2018 12:39

Thanks eveyone for your help. Taxfiler have said I need to enter two self employments so I will try that

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Replying to Marion Hayes:
RLI
By lionofludesch
24th Jan 2018 13:14

Is that not a work around for the HMRC software, though ?

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Replying to lionofludesch:
By Marion Hayes
24th Jan 2018 13:30

Digita is just the same - I understood that it is a limitation of HMRC so to try to file 2 at once would fail the process

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