Half a year Self employed,which accounting period

M

mike54

Guest

Hi, I’m a self employed man, I started in business on 01/07/09 to date I haven’t paid any tax, I’m about to do my tax return, which accounting period should I pay? From 01/07/09 up to 31/12/09or from 01/07/09 up to 31/07/10. If I had the choice, I would go with half a year then a full year then after but I don’t think it’s up to me.
 
You can use 31st Dec---download Leaflet IT48 from the revenue website for all the details (chapter 4)
 
Revenue have commencement rules. If you don't know the commencement rules, you will have to go to an accountant / tax adviser.

Just to be aware, they also have cessation rules.
 
Hi
No! thanks for your advise, but lets me get this straight, if I could afford the accountant/tax advisor, I won’t be on the forum or internet trying to work things out myself with others help. There are people out there trying to do business legally and still there not making it. You might have heard about the saying being “time rich and cash poor” so if you cannot help, please leave others the opportunity to do so if they wish to.
Most of the relevant information about Tax is written in “administration/accountant language” don’t ask me why? That’s my personal opinion.
 
mike54 said:
Hi
No! thanks for your advise, but lets me get this straight, if I could afford the accountant/tax advisor, I won’t be on the forum or internet trying to work things out myself with others help. There are people out there trying to do business legally and still there not making it. You might have heard about the saying being “time rich and cash poor” so if you cannot help, please leave others the opportunity to do so if they wish to.
Most of the relevant information about Tax is written in “administration/accountant language” don’t ask me why? That’s my personal opinion.
Click to expand...

Hi.
It seems you're asking the question and jumping down the throat of one of the people trying to help you!
 
Basically, it is your choice whether you do accounts to 31/12/09 or 30/06/10.
The simpler option is 31/12/09, but you then have to get your return in by 31/10/10.

If you go for 30/06/10 you won't have to get 09 and 10 returns in till the following year. You would return 6/12 of the first year's profits in the 2009 return, and the full year's profits ( year ended 30/06/10) in the 2010 return.
There are other complications after that, but if you go that route, come back next year and ask again...
 
Your right, its not upto you what you return in your tax return

First tax year of trading
[FONT=Adobe Garamond Pro,Adobe Garamond Pro][FONT=Adobe Garamond Pro,Adobe Garamond Pro]In the first year of trading i.e. on commencement, the taxable profits are the profits for the period from the date of commencement to the following 31 December.[/FONT]
[FONT=Adobe Garamond Pro,Adobe Garamond Pro]This rule is in Section 66 TCA 1997.[/FONT]

[FONT=Adobe Garamond Pro,Adobe Garamond Pro]Second tax year of trading[/FONT]
[FONT=Adobe Garamond Pro,Adobe Garamond Pro][FONT=Adobe Garamond Pro,Adobe Garamond Pro][FONT=Adobe Garamond Pro,Adobe Garamond Pro]The assessable profits for the second year of commencement are determined as follows:[/FONT]
[FONT=Adobe Garamond Pro,Adobe Garamond Pro]if there is a 12 month period of accounts ending in the second tax year of commencement, and that is the only period of accounts ending in that year, the amount of assessable profit for the year will be the profits for that 12 month period, or[/FONT]
[FONT=Adobe Garamond Pro,Adobe Garamond Pro]if there is a period of accounts ending in the second tax year of commencement, and that period of account is less than 12 months and is the only period of account ending in that year, then on the taxable profits of the 12 month period ending on that date, or[/FONT]

[FONT=Adobe Garamond Pro,Adobe Garamond Pro]if there are 2 (or more) periods of account ending in the second tax year of commencement, on the taxable profits of the 12 month period ending on the later (or latest) of those dates, or[/FONT]
[FONT=Adobe Garamond Pro,Adobe Garamond Pro]in any other case, i.e. where there is no period of accounts ending in the second tax year of commencement or where the trade commenced less than 12 months before the accounting date ending in the year, on the actual profits of the second tax year of commencement (i.e. from 1 January to 31 December).[/FONT]

[FONT=Adobe Garamond Pro,Adobe Garamond Pro]Third tax year of trading[/FONT]
[FONT=Adobe Garamond Pro,Adobe Garamond Pro][FONT=Adobe Garamond Pro,Adobe Garamond Pro][FONT=Adobe Garamond Pro,Adobe Garamond Pro]For the third tax year, the profits assessable are the profits assessable on a normal basis, i.e. the profits of the 12 month accounting period ending in the tax year. [/FONT]
[FONT=Adobe Garamond Pro,Adobe Garamond Pro]There is relief provided where the taxpayer may make a claim to have the profits assessed in the third year reduced by any "[/FONT][/FONT][FONT=Adobe Garamond Pro Bold,Adobe Garamond Pro Bold][FONT=Adobe Garamond Pro Bold,Adobe Garamond Pro Bold]second year excess[/FONT][/FONT][FONT=Adobe Garamond Pro,Adobe Garamond Pro][FONT=Adobe Garamond Pro,Adobe Garamond Pro]", which is the excess of the profits assessed in the second year over the actual profits (from 1 January to 31 December) of the second year.[/FONT]

And good luck. You will need it if you don't understand the above rules but as you said, you can't afford to get advice on doing it properly.[/FONT][/FONT][/FONT][/FONT][/FONT]
 
Gervan said:
Basically, it is your choice whether you do accounts to 31/12/09 or 30/06/10.
The simpler option is 31/12/09, but you then have to get your return in by 31/10/10.

If you go for 30/06/10 you won't have to get 09 and 10 returns in till the following year. You would return 6/12 of the first year's profits in the 2009 return, and the full year's profits ( year ended 30/06/10) in the 2010 return.
There are other complications after that, but if you go that route, come back next year and ask again...
Click to expand...

If he goes with 30/06/10, isn't his return due on 31 Oct 2010 for the 2009 apportioned income i.e. from commencement to 31 Dec?
 
Even if OP chooses 31/12/09 as his y/e, his first tax return (2009) isn't due in until 31/10/2011 as you get an extra 12 months grace for first tax return. His tax return for 2010 would also have to be filed on this date.
 
Should also add that by choosing 31-Dec as your permanent y/e, you don't need to worry about Revenue commencement rules at all because you satisfy all the criteria automatically

(my wording is wrong but you get my meaning I presume!)
 
DB74 said:
Even if OP chooses 31/12/09 as his y/e, his first tax return (2009) isn't due in until 31/10/2011 as you get an extra 12 months grace for first tax return. His tax return for 2010 would also have to be filed on this date.
Click to expand...

Is this a Revenue concession? If not, can you please refer me to the relevant tax section as I would like to read up on it. Thanks.
 
Haven't a clue what the tax section is, if any. It may indeed be a Revenue concession, albeit one that is there for at least 20 years at this stage now.

http://www.revenue.ie/en/tax/it/leaflets/it10.html#section5

Persons coming into Self-Assessment for the first time

You are advised to make a payment of 90% of the estimated liability for the first year of trading. If, for example, your tax affairs for 2008 were dealt with under PAYE and you commence as a self-employed person in 2009 you can make a payment of Preliminary Tax on 31 October 2009.

Note that if you chose the option to pay Preliminary Tax of 100% of the previous year's liability (i.e. liability - net of PAYE tax but increased to take into account the amount of income levy that would have been paid had the income levy applied in 2008) a payment of Preliminary Tax does not generally arise for the first year.

An individual, who enters the self-assessment system because they have commenced in trading, have until the return filing date for the second year to submit tax returns for both the first and second year trading.

However, as mentioned previously, early filing of returns is advisable, as it allows an individual to know in advance of payment deadlines what tax is due.
 
Yeah - I was surprised myself that I couldn't find it in the legislation. I couldn't actually find anywhere in the legislation which states that your return should be in by 31-Oct (or 31-Jan which would have been the deadline in 1997 when the TCA was written into law)

I suppose if the dates were enshrined in law then the Revenue wouldn't be able to extend the deadline for ROS submissions or things like that, unless those extensions themselves were then passed into law.
 
Hi guys,

Thanks very much for all your replies much appreciated.

I didn’t mean to cut anybody throat, not at all and I think paddy199 did not read my reply as such hence his input in the discussion. I was expecting an open discussion on the topic as it has lately been the case, (an exchange of opinions from whom ever know what they are talking about and I’d make up my mind from there). An accountant/ tax adviser wouldn’t be beneficial to anyone from the forum except me if I could afford it.
Thanks again.
 
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