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What would happen if we have no, or insufficient overlap profits?
Like for example in the Emma question, what would we do if we had say, only 5 months of overlaps instead of 11?
Why we have not deducted any overlap relief in this question?? :/
when do we use CYB?
@asheikh, mostly in the third year when we have accurate 12 months similar to the data given
@asheikh, Well, since we’re on this lecture, I’m assuming you mean CYB re Long POA’s not ending in the tax year.
An easy way to break this down is to look at the data given (the accounting y/e’s etc) and list out your Tax Years in chronological order (e.g. 2011/12 … 2012/13 etc). As expected, the subject has been trading already for some years, meaning he’s not commencing trading, therefore meaning he’s been on a CYB assessment since after sorting the commencement assessment problems (Opening years).
Now, to make things easy for yourself, say that there is CYB assessment used for the Acounting period JUST BEFORE the first “problem” Tax year (that which has to be worked from prior period UP TO within the long POA where we CREATE a tax year (1st problem tax year) …. [We will have created O/L profits, but don't let this crowd your mind here for your question's purposes] ….After 1st problem tax year is sorted, we then we work for the 2nd “problem” Tax year (12 months from within long POA to the new choice accounting date). At this point, we’d have long dealt with the O/L profit issue, and so we can go on using CYB from the next tax year (see your list!), of course based on the tax years in which subsequent AP’s end in …
So to sum up…
1) Make your tax years list, first identifying the tax year just before problem tax year 1 and assess it on CYB – say for regular 12 month y/e 31 Dec 2010 with profits 6000, we say 6000 goes to our IT comp for 2010/11 ( i.e apply CYB for the ACCOUNTING PERIOD just after which we take the long flight to change our accounting date). At this point, after many tax years of CYB assessments, we’ve just seen our ‘last’ and we’ll not be seeing CYB until 2 problem tax years later!!
2) Deal with your problem tax years 1&2 (Following my example, Create a TY 2011/12, then do 2012/13) following the rules.
So welcome back to CYB … 2013/14 (the very next AP after your problem TYs) will be assessed on CYB.
Hoping I didn’t make u feel worse!
Thank you very much for your help. please keep up with the examples as they make it easier to understand.
Yet another great lecture ..well understood – very clear and concise voice!!! thank you.