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When is investment income recognisable?

An investment has distributed profits shortly after my year end. Should it be recognised as revenue?

Hi All, I hold a small investment in a property company. My accounts are drawn up to 31 March but the distribution of profits was not paid to me until April. Should i accrue this income into my 2019 accounts or would it be recognised next year? Thanks in Advance.

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23rd Apr 2019 10:22

Your accountant should be able to help you with this.

Or even in supplying enough information.

Are we talking dividends here ?

When in April exactly ?

What do you mean by "your accounts" ? Sole trader or company ?

Is this a different entity to the property company ?

The fact that you're asking basic stuff here should push you towards the realization that you need an accountant.

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to lionofludesch
23rd Apr 2019 10:53

Be fair, Lion - it's you that's asking the basic stuff.

But I agree. Without knowing what, basically, the OP is asking, how can anyone provide any meaningful answer?

(I admire your patience in dealing with so many of these OPs.)

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to lionofludesch
24th Apr 2019 14:08

***

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By DJKL
to smiler0801
23rd Apr 2019 12:52

Well, your company (as a partner) is likely to be taxed on its share of the LLP profits to 31 March whether funds received or not pre 31 March (As will be declared within The LLP SA Return) so I would be inclined to recognise the share of profits in your accounts but I would need to read up the relevant FRS under which your company reports to check that is a correct approach and whether these ought to -

a. be accounted for as accrued
b. if they should then whether via Comp Income statement etc
c. appropriate treatment/posting of CT provision re profits that will be taxed even if funds not to be received.

Do you currently reflect the Company's (Member) up to date capital and current accounts in the LLP within the Company's own accounts?

(Am afraid I find accounts disclosure boring so never read enough and am usually out of date/wrong, but starting point has to bethe framework under which your company reports)

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to smiler0801
23rd Apr 2019 12:56

Is "LP" short for "property company", per your OP?

Does "I invested" mean "my Limited Company invested"?

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By DJKL
to Tax Dragon
23rd Apr 2019 13:02

I though LP was LLP, I read it as OP's Limited Co is a partner in a property development LLP; if not ignore my above post

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to smiler0801
23rd Apr 2019 13:57

Quote:

So my company is a Limited Company with 31 March year end. I invested into a LP who bought a property, refurbished it and sold it on. The distribution is a percentage of the profits based on my share of investment so not a dividend but more a profit distribution? I will receive the money this week and not sure exactly when it should hit my accounts? The LP's year end is also 31 march and the % of distribution is based on their profits to that date.

A few unexpected nuggets in there.

Smiler - you definitely need an accountant. Don't waste your time on here asking for free advice. It'll only end in tears.

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23rd Apr 2019 13:56

Precision is vital to get correct answers.

It is unclear whether you invested directly or whether a company you own invested.

It is unclear if the investment was in a company, an LLP or an LP. These are three different legal entities.

Both of these matters alter the tax effects drastically. There may be other details you have not mentioned or have misunderstood that could affect things further. Get paid-for professional advice before you make an expensive mistake.

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