End of business & basis period..is this allowed..
edkav
Registered Posts: 37 Regular contributor ⭐
Sole trader stopped trading on 31st March 2007, but activity still happening in his bank account up to June 2007 due to final payments being sorted and money owed to him still coming in.
His basis period is 1st Jan 06 - 31st December 2006.
Can he do a tax return for the 06/07 and 07/08 or does he have to conclude it all on the 06/07 return?
Any help greatly appreciated.
His basis period is 1st Jan 06 - 31st December 2006.
Can he do a tax return for the 06/07 and 07/08 or does he have to conclude it all on the 06/07 return?
Any help greatly appreciated.
0
Comments
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My first reaction would be to say tie it all up in the 2007 Return, but I would be interested to hear what anyone else thinks. :001_unsure:0
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I thought that too, but he would prefer to do the two seperately and he also has no overlap profit.0
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As accounts are prepared on the accruals basis then theoretically one would expect all profits/losses earned or incurred in the period to be complete as at 31 December. However, there could be 'loose ends' tied up beyond 31 December that may need to be reported on the SA return but you must ensure that income/expenditure are reported in the correct periods (i.e. in the 2007 return) and not split to suit the client's requirements.
Kind regards
Steve0 -
I agree that if trading ceased on 31st March 2007 then it all goes on the 2006/07 tax return - no choice.
However, if it would be beneficial to spread profits over into 2007/08 then sole-traders can be pretty flexible in terms of when they decide to cease trading.
It is very unlikely to be questioned by HMRC if there is still activity on the bank account going into June.0 -
Thank you everyone for your helpful replies. :001_smile:0
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