Overlap Relief, Cessation

Newbie
Newbie Registered Posts: 229 ? ? ?
I need help calculating the overlap relief from a letter provided by HMRC

The figures from Mr X first two self assessment tax returns to allow you to calculate the overlap figure are as follows

1996/97
Basis period 01/06/1995 - 31/05/1996
Profit £3287

1997/98
Basis period 01/06/1996-31/05/1997
Profit £7556

no overlap in the accounts between period so any overlap would depend on what was declared on pre-self assessment between 01/06/95 and 05/04/96 when SA introduced for which we do not hold records

End of letter

help please

Comments

  • peaman
    peaman Registered Posts: 123 ? ? ?
    Are HMRC saying that they are the first tax returns ever submitted?

    If the business started before 06.04.94, the transitional relief for when we changed from the preceding year to current year basis, would be for the period 01.06.96 to 05.04.97 - £6397 (£7556 x 309/365).

    If the business started after 06.04.94, they would go straight into the current year basis, so overlap relief would be for the period 01.06.95 to 05.04.96 - £2,783 (£3287 x 309/365).

    I am a bit confused by HMRC's comment, it looks like they are agreeing that the overlap would be for the period 01.06.95 to 05.04.96, but either it wasn't claimed on the return, or they just haven't kept copies.

    I would just claim the £2,783 and let HMRC question it if they want to.
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