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myacca1990.
myacca1990.-
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myacca1990
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“If Idris prepares his accounts to 30 June the interval between earning profits and paying the related tax liability will be 9 months longer than with an accounting date of 5 April”
The payment deadline for the tax liability is 31 January following the end of the tax year , regardless of the accounting date. What I can’t understand here is how come he will delay his tax payment by 9 months if he chooses a 30 June accounting date?
Tax Tutor
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I assume first of all that you have worked through Chapter 6 that deals with the bases of assessment for the unincorporated trader – which for an ongoing business is CYB.
Therefore for the tax year 2021/22 a trader preparing accounts to 5 April will be assessed on the adjusted trading profit of the accounting year ended 5 April 2022 whereas the trader who prepares accounts to 30 June will be assessed on the adjusted trading profit of the accounting year ended 30 June 2021(9 months earlier).
In both cases the tax will be due by 31 January 2023 meaning that the gap between when the trader ACTUALLY makes the profit and when the tax becomes payable on that profit is 9 months longer by choosing the 30 June accounting date!myacca1990
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All clear.
Thanks a lot Sir!
myacca1990
Tax Tutor
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