Settle an arguement please!!

jilt

Just to settle an arguement, if a sole trader starts trading in Feb, is there ever any reason why he would not have to file a SA tax return up to 5th April of the same year?

monkeypuzzle47

No.
They could prepare their accounts for the 12 months from when they first started.

However to keep in line with the 6th april to 5th april tax year and keep it simple for a small sole trader, I would suggest they prepare their accounts feb - 5 april. then next year a full 12 months.

Psyche

If they didn't call the first "financial year" February to April, if they used February to February, then they will get stuck paying overlap profits on the February to April period. Tax on profits made between February and April is payable as part of that financial year, and then the full year's profits are taxable in the next financial year. So yes taxes will be due this year, no getting around it.

jilt

Many thanks for your replies. The arguement was that they didn't need to submit a tax return for tax year ended 5th April 2008 even though they started trading Feb 2008.

I have explanied that the first accounts produced could be for a period greater than 12 months but that a tax reurn has to be submitted for each tax year that they traded in regardless of when they chose to have their year end or produce their accounts.

JodieR

The only time they wouldn't need to is if between Feb and 5th April they were just setting the business up and only actually started making sales after 6th April, then pre-trading expenditure can just be treated as being incurred on the first day of trading. But as you've said they started trading in Feb I'm guessing this doesn't apply!