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Alexandra started in business as a sole trader on 1 August 2021 and prepared her first set of accounts to 30 April 2023. What is her starting date and and end date for the tax year 2022/23, her second tax year of trading?
Shouldn’t the answer to this question be;
STARTING DATE : 1 May 22
ENDING DATE : 30 April 23as 1 May 2022 and 30 April 2023 fall in the period 1 August 2021 to 30 April 2023
Thanks
The rules for basis periods as found in the manual are so important. You must learn them.
Year 1 – 1.8.21 to 5.4.22 – tax year 21/22 – 8 month of the total profits
Year 2 – this is where you need to ask the question – is there a set of accouns with a year end in this tax year and the answer is not – so following through the flow chart you see that becasue of this the basis of assessment must be actual – i.e. 6.4.22 to 5.4.23 – 12 months of the total profits.
Year 3 – repeat the question and the answer this time is yes – the year end is 30.4.23 but it is longer than 12 months – so follow through the flow chart and the rule says – 12 months to the year end – i.e. 1.5.22 to 30.4.23 – 12 months of profitsThis then gives rise to overlpa profits.
Please learn the rules using the flow chart.
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