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Hello Tutor
Ref to F6 chapter 6, basis periods
Sorry to bother you, but I have been struggling, what to do if the first period of accounts is 12 months. I think I have got it now but would like to confirm this
To do so I have used the following
Trading Start date 01/1/15
Accounts prepared to 31/01/15
Period to 31/01/15 £30,000
Y/E to 31/01/16 £60,000
The Answer I came to was14/15. Actual (01/01/15 –05/04/15)
3/12x 30,000 7,500
14/15. 1st 12m)
(01/01/15 – 31/12/15)
Period to 31/12/15 30,000
15/16. CYB A/C. (Y/E 05/04/16) 60,000
Overlap Profit 01/01/15 – 05/04/15 (3/12x 30,000) 7,500? If correct, could I have used CYB for 14/15 rather than 1st 12m
Regards Wayneg
I think in your question you should have said that the opening accounting period went to 31.12.15 thus creating an opening period of 12 months – you have put 31.01.15!!! You will then need to make the second period the y/e 31.12.16!
Then in your answer you have shown assessments twice for the 14/15 tax year and your attempt at CYB in what you state to be the 15/16 tax year is horribly wrong as accounts are not being prepared to 5 April!!
I think you need to restate both your question and answer!
Going back to your original question about an opening accounting period of 12 months – this is the easiest circumstance you could see as it would mean that you would be able to use CYB from the 2nd tax year onwards!Hello Tutor
Ref to F6 chapter 6, basis periods
Sorry yes you are correct the accounts prepared to should have been 31/12/15
I also realize I was trying to answer more than 1 Question with differing conditions
And mixed them together.
So Question 1,
Trading Start date 01/01/15
Accounts prepared to 31/12/15
Period to 31/12/15 £30,000
Y/E to 31/12/16 £60,000
The Answer I came to was
14/15. Actual (01/01/15 – 05/04/15)
3/12x 30,000 7,500
15/16. 1st 12m
(01/01/15 – 31/12/15)
Period to 31/12/15 30,000
16/17. CYB A/C. Y/E 31/12/16 60,000
Overlap Profit 01/01/15 – 05/04/15 (3/12x 30,000) 7,500
Have I got this right, and is the presentation of the answer acceptable.Question 2
How to treat and present 12 month trading period that is equal to a tax year
Trading Start date 01/04/15
Accounts prepared to 31/03/16
Period to 31/03/16 £30,000
Y/E to 31/03/17 £60,000
Here I came up with two possible solutions (both of which are probably horribly wrong)
1, present the 1st 5 days (normally ignored) as 14/15
14/15 Actual 01/04/15 – 05/04/15 0/12x 30,000
15/16. 1st 12m. 01/04/15 – 31/03/16 30,000
16/17. CYB. A/C Y/E 31/03/17 60,0002, Ignore the 1st 5 days
15/16 Actual 01/04/15 – 31/03/16
Period to 31/03/16 30,000
16/17 CYB. A/C Y/E 31/03/17 60,000
If horrible wrong I am obviously still missing something and a hint would be appreciated
Regards WaynegIn Q.1 and in any circumstance that you start trading with a 12 month period you will be able to use CYB in the second year of assessment because you will have an accounting YEAR ended in that tax year – if you look at your answer and your use of the 1st 12 months in 15/16, that IS the accounting year ended 31.12.15 – that is CYB!!
In Q.2 again you have an opening 12 month accounting period – as in our exam we time apportion to the nearest month the examiner would give you a trader starting to trade on 6th April not 1st April and then preparing accounts to 5th April so would have an answer like you produced in option 2 with a CYB assessment in 16/17
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