Confused re: end of year tax

[Cazz]

For the last 2 years I've done my accounts to 5th April and started the new tax year on 6th April because it's fallen right for me to do this.

Do I have to stick to those dates from now on to make it a correct full year? Obviously 5th April is Thursday so does that mean I should split that week and put Friday on next year's tax or is it okay to do it up until the end of March (so all of last week is on 2011-2012) and start this weeks accounts (from tomorrow, 2nd April) on my new tax year?

I use the NCMA accounts book and that works on weeks beginning on a Monday so it would be easier to finish on a Friday but obviously that means I'll be a few days sort of a full year - is this allowed?

[MrAnchovy]

The tax year officially ends on 5th April every year but HMRC accept 31st March as 'the same as' 5th April for most income tax purposes.

You don't have to do things the way the NCMA book sets them out, so if this is the only reason you might want to always end your accounting years on a Friday I wouldn't bother.

If you do want to always make your accounting years end on a Friday the procedure is described here (http://www.hmrc.gov.uk/manuals/bimmanual/BIM71030.htm), although HMRC probably aren't going to make a fuss if you just do it in most cases.

[Cazz]

Thank you Mr A :thumbsup:

So if I understand you correctly, I could just do it until 31st March without having to notify them beforehand and each year just do 31st March or 5th April depending how they fall?

Can it only be one of these two dates and none in between?

[MrAnchovy]

So if I understand you correctly, I could just do it until 31st March without having to notify them beforehand and each year just do 31st March or 5th April depending how they fall?

Can it only be one of these two dates and none in between?

No, in theory you have to stick with a date once you have changed it unless you make the election and follow the procedure I linked to.


Can it only be one of these two dates and none in between?

HMRC used to accept by concession any date between 31 March and 5 April inclusive as equivalent but when this was made official in the Tax (Trading and Other Income) Act 2005 it was made less flexibile. However in practice I can't see HMRC giving you a hard time unless you are trying to be clever by 'managing' the cut-off to exclude a large amount of income that you would otherwise pay tax on. If you have a compliance audit don't quote me on that though :D

I think you may be focussing on unneccessary detail - if you don't find it easier to work monthly then just split the week containing the 5th April into two, it takes less time to do it than it does to work through the detail of tax legislation, extra-statutory concessions and HMRC practice to work out the alternative.

[sonia ann]

in 16yrs I have always ended my accounts on the day my ncma accounts book ends Cazz ie so the last week of that year includes the whole of the last week that starts with the last Monday of March..............so if the 31st March was a Monday my accounts would finish the 6th April and start the next financial year the 7th April.........do you get me?

My bills are always sent out and include the last week of the month,so if the Monday is the 31st then it is included in that month and the month is a 5 week month.

this way my accounts are "neat and tidy" with all moneys owing and paid recorded without having to split anything up.

at the end of the day I think we can get far too obsessed with detail and as long as you are not out to defraud the tax office in any way I don't think there is a problem

[Cazz]

Well I realised today that this doesn't need to be complicated for me at all!

The 5th of April is Thursday and as Friday is a bank holiday and I won't be working, I don't need to split any weeks and can do my end of year at 5th April as I have done in previous years!

This also means that 5th April will fall at the weekend for the next two years so again there'll be no problem to do a complete week.

I'll probably be asking this question in 4 years time though! Unless of course I'm earning so much money by then that I can afford an accountant!