Business Tax

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neilw41
neilw41 Registered Posts: 12 Regular contributor ⭐
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:

Comments

  • willis967
    willis967 Registered Posts: 5 New contributor 🐸
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    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
    neilw41 Registered Posts: 12 Regular contributor ⭐
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    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
    willis967 Registered Posts: 5 New contributor 🐸
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    It certainly is when the business is just starting out!!

    Good luck with the rest of the book.

    Stuart
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