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wayneg
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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
Tax Tutor
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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!wayneg
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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 WaynegTax Tutor
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In 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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