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Hello,
I managed to be able to correctly allocate the profit to the correct tax year fine, following the notes and the studies, but what is confusing me is that how could it be possible for someone to have 3 or 4 years worth of future profits that we are still allocating to the correct tax year. what would this mean from a filing a tax return point of view? I suppose we are not really able to declare 2 past years’s worth of profits. so this is really confusing me here.
Please explain this in a real-life scenario, would this actually happen in life where we will be allocating profits for past years and declaring them late or how would we apply this in real life?
Sorry but I do not understand your question – “could it be possible for someone to have 3 or 4 years worth of future profits that we are still allocating to the correct tax year”??
The bases of assessment establish what tax adjusted trading profits will be assessed in each tax year ie what profit to include within the income tax computation of a relevant tax year, such as 2019/20.
Once the income tax computation has been prepared this must then be submitted (filed) by the required date and the tax paid over to HMRC.
This process is performed for each tax year!
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