Business Tax- long period of Accounts Help...

Business Tax- long period of Accounts Help...

This is a simplistic step-by-step approach. I actually got my hubby to follow these instructions, who is not an accountant, and he managed to do it, so if you are a visual person, this may help (assuming we are talking about sole traders / partnerships with overlap periods)<BR><BR>Get a piece of paper, checked. Draw a long timeline. Assume that one month is one square, as we apportion on a monthly basis.<BR><BR>Mark the start date of the business with a star (say 1 Feb 2002 for example).<BR>Mark every 5 April / 31 March with dots.<BR>Mark ends of accounting periods with stars. (say first one will be May 2003, then every May onwards)<BR><BR>Above your timeline, connect the dots together. These are your tax periods. Write on them 6/4/02-5/4/03, or whatever period they relate to.<BR><BR>Now you work underneath your timeline.<BR><BR>Year 1: Draw a line from your start date star to the first dot. This is the period on which tax is payable in the first year.<BR><BR>Year 2: You will need to draw a line underneath Year 1. There are 3 possibilities. Have a look. Have you got a star between your dots for the tax year? If so, we start from there, and start drawing the line counting backwards.<BR><BR>Possibility 1: You have a star. If you manage to step back 12 squares without going back beyond your start date, this is the period to be assessed in the tax year.<BR><BR>Possibility 2: You have a star. If you only manage to step back say 9 dots, and you reach the start point (another star), you have to move forwards, thus extending to the right of the star, until you have 12 steps, and that would be the period to be assessed in the tax year. Incidentally, that would be the first 12 months of trading.<BR><BR>Possibility 3: No twinkle stars. Connect the two dots, as all else failed, and the basis period is the same as the tax year.<BR><BR>Year 3: Find your star that falls within the two dots for the tax year, count back 12 steps, and draw a line from your star to there under Year 2. This is the period to be assessed.<BR><BR>Subsequent years will always fall between little stars.<BR><BR>The nice thing is, if you now have a look, you have 3 lines underneath each other, which may or may not overlap. If they do, the overlap will be the no. of squares (e.g. months), which you can count as Jan, Feb, March, etc., every square being one month. You can also apportion taxable profits, because a line that is say 7 squares long in the first year will be seven months out of however long the period of account is, etc.<BR><BR>Hope this helps.<BR><BR>Ditti