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Accounting period question for all of the HMRC buffs out there

(14 Posts)
atworknotworking Mon 29-Jun-09 18:53:53

Is it possible to have an accounting period longer than a year, if it's the first return ? for example if someone registers as self employed in Dec but doesnt start trading until a good few months later, can the accounting period be carried forward so that the first return covers 16 - 18 months instead of 12, or is it better to change the trading period from the standard April, to twelve months after registration date?

I can hardly understand what I've just written but can't figure out a better way of saying what I mean hmm . Basically got a lot of exenses in the first 6mths but no income, so rather than loose claiming the expenses on a low T/Over is their a way to spread it abit to the next year when the income starts?

Any advice gratefully accepted

MatNanPlus Mon 29-Jun-09 18:59:36

You can still file a return as far as i am aware, i know in my 1st yr my ins and outs were about even.

mrsflowerpot Mon 29-Jun-09 19:00:10

We certainly did that as a ltd co - not sure if it works the same for sole traders. Think 18 months is the max.

ChasingSquirrels Mon 29-Jun-09 19:05:30

have started to type but it is a bit complex. See an accountant for the best advice.

You wouldn't lose the expenses, you could offset them against total income in the tax year, or carry back/forward as appropriate.

See an accountant.

atworknotworking Mon 29-Jun-09 19:19:35


such quick replies, and quite frankly I am amazed that you understood what I meant.

Forgot to mention it is Ltd Co, it's not me I am self / emp, it's a friend, I thought you could do an 18mth thing but wasn't 100% I can't keep up with all the changes.

Thanks Again

ChasingSquirrels Mon 29-Jun-09 21:25:49

ah, if limited company then much easier.

1st account period can be upto 18 months.

tax will be first 12 months and remaining period - on a pro-rata basis.
You will do a trading profit (or loss) tax comp and then pro-rata the profit over the 2 periods.

atworknotworking Mon 29-Jun-09 21:37:07

chasingsquirrels Ahhh that's as clear as mud lol
You are obviously a highly intelligent supreme being kind of thing, whereas I am a mere mortal.

I will endeour to read this valuable information severalmillion times and interpret it very badly, whilst sounding very clever when I try to help my friend out.

I get the 1st period can be 18mths bit, then iit gets a bit head explodingly WTF, I think in simple "me" terms that:

I can go from start date say Dec + 12 mths, then the remaining months as a seperate period, but what calc should I use to pro-rata the profit, do I divide it by the number of months over both periods ie: 18mths then multiply by the number of months in each period hmm

ChasingSquirrels Mon 29-Jun-09 21:43:06

ok, so say you start Dec 08 for 18 months to May 10 (unless started 30 or 31 Dec can't go to 30 Jun as more than 18 months)

1st set of accounts (to be filed at companies house) cover 18 month period xx Dec 08 - 31 May 10.

You then have to do 2 tax returns (due with HMRC by 31 May 11). These will be
xx Dec 08 - xx(-1) Dec 09; and
xx Dec 09 - 31 May 10

So you calculate the taxable profit (or your accountant does!!), divide it by total number of days and then the profit for the first 12 months is 365 days worth and profit for the 2nd period is remaining days worth.

ChasingSquirrels Mon 29-Jun-09 21:43:37

or is that muddier!

atworknotworking Tue 30-Jun-09 07:09:49


Major light bulb moment grin

I finally get it thank you very much, I have been trying to convince my friend to try to combine the part year with her first full trading year, as her set up costs are quite substantial but she didn't get income in that period, it seems a bit of a waste if she did two seperate part / full year accounts, but she is convinced that she has to run April - April, have explained (been s/emp a long time) that this isn't the case, but as a newbie she needs a bit of guidance. I know the basic stuff but never had any Ltd Co experience before and the HMRC site is really veryunuser friendly. And her accountant has asked her to do all the prep herself so he can do the return, which I find a bit odd as she doesn't even know what to claim for.

Thanks again x

ChasingSquirrels Tue 30-Jun-09 15:15:50

accountant is bloody crap then! they should be advising on this (not some stranger online).
Companies can have any year end they want, certainly DO NOT have to run to April.
In general the year end is set as the end of the month in which you are incorporated, so with a Dec 08 incorporation the first set of accounts would run to 31 Dec 09.
You would then still have 2 tax returns;
xx Dec 08 - xx(-1) Dec 09; and
xx Dec 09 - 31 Dec 09
With the same pro-rata of profit.

BUT, she wouldn't lose the expenses, as long as they are tax allowable expenses they would be carried forward to offset against the next available profits of the trade.

She really needs a decent accountant, not in Cambs area is she???

ChasingSquirrels Tue 30-Jun-09 15:19:30

also, although the year end would be set as that you don't have to stick with it - can be changed as noted earlier.

also, tax is the least of this, she needs statutory accounts. Are you sure the accountant hasn't just asked her to gather the info together rather than decide what is allowable?

atworknotworking Thu 02-Jul-09 13:38:50

LOL no sadly were up norf, It sounds a bit hmm to me re accountant, I've used them in the past and they havn't asked me to work it out for them before, of course it's a lot cheaper if they have all the figures and just check through to make sure youv'e not missed anything.

I reckon she should get a new one, do you do remote accounts?

How expensive cheap grin are you?

ChasingSquirrels Thu 02-Jul-09 16:01:07

quite expensive as it happens, not big-4 rates but not cheap either. We do have clients not in the area, but I wouldn't recommend it - you are best with someone local.
Good luck!

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