Business Tax

neilw41

Hi. I thought I had nailed this, but now it seems I havent :001_unsure:

A business started trading 1st January 2009, it decides to produce it's accounts 30th June each year.

Is the following correct:

Tax Year 1 = 2008/9 - 1st January 2009 - 5th April 2009

Tax Year 2 = 2009/10 - 1st January 2009 - 30th June 2009

Tax Year 3 = 2010/11 - 1st July 2009 - 30th June 2010.

However:

AAT says - Is there a period of account ending in the second tax year, (yes, 30th June 2009), how long is this period, (less then 12 months), then tax year 2 should be the first 12 months of trade. This makes period of account for tax year 2 = 1st January 2009 - 31st December 2009. What is the correct answer?

I'm confused :crying:

willis967

You are on the right lines Neil except:

Tax year 2 = 2009/2010 - 1st January 2009 - 31 December 2009

This means that overlapped profit on cessation of business would be,

1st Jan 2009 - 5th April 2009 & 1st July 2009 - 31st December 2009

neilw41

Ok thanks. So, 1st January 2009 - 31st December 2009 is the correct answer.

I do get the overlap of profits, I just forgot to mention it in my question.

I guess any advice should be, do not start a business 1st January and have a year end 30th June, thats an awful lot of profit to be taxed twice!

Neil

willis967

It certainly is when the business is just starting out!!

Good luck with the rest of the book.

Stuart