Start of tax year confusion

M

MadraRua

Guest
I registered as sole trader in Nov 2011. Business start date is Nov 1st 2011 and my first invoice was shortly after.

I'm now filling out my return on ROS for the first time. Statement of accounts would be from 1 Nov 2011 to Oct 31 2012, correct? So any invoices I send on or after 1st Nov 2012 are for the next tax year 2012?

Is it unusual for a business's tax year to start so late in the year like mine? Should I change it to January?

One other thing, I bought a laptop back in Feb. Can I now claim this as an asset or do I do that next year?

Many thanks.
 
Hi Madra,
Regardless of your own financial year, the tax year is always the calendar year, January to December. It's Pay & File for 2011 now, so only transactions from 2011 are relevant.

However, I *think* when you start a business, that you don't have to do a return the first year if you like, so you may be able to leave your first return until Oct/Nov 2013 instead - others can confirm that. (That's the way it was in 2006 when I started)

While I started up in September, I do my accounts for the calendar year, as I think it's much simpler that way.

Re the laptop you bought in Feb 2012, this would be relevant for Pay&File 2012 in Oct/Nov 2013. That's an asset rather than a day to day expense, so you can only claim 1/8 of the cost each year in your tax return (as a capital allowance).
 
fizzy said:
It's Pay & File for 2011 now, so only transactions from 2011 are relevant.
Click to expand...

Thank Fizzy.

Seeing as I had only one invoice in November/December 2011, do I just file for that invoice now? My statement of accounts would be from 1 Nov 2011 to Dec 31 2011, correct?

Next year, I would file for all invoices between Jan 2012 and Dec 2012, also correct?

Thanks for the help.
 
I think the extract from accounts should be from your Trading year accounts - Year ended Oct 2012....

Re filing ....Have you looked at the guides on Revenue's website?

Quote:

"Making Tax Returns under Self-Assessment for the first time

Individuals, who enter the self-assessment system because they have commenced to trade, have until the return filing date for the second year to submit tax returns for both the first and second year of trading.
 
@madrarua

For 2011 - actual commencement to Dec 31 2011; (filing Oct/Nov 2012)
For 2012 - 1st twelve months i.e. 1/11/11 to 31/10/12 (filing Oct /Nov 2013)
For 2013 - Accounts to 31/10/13 (filing Oct/Nov 2014)

There is more to it than this with an option in 2012 to 'actual' - not normally used as profits are rising.

I would think you may need an accountant though
 
WizardDr said:
@madrarua

For 2011 - actual commencement to Dec 31 2011; (filing Oct/Nov 2012)
For 2012 - 1st twelve months i.e. 1/11/11 to 31/10/12 (filing Oct /Nov 2013)
For 2013 - Accounts to 31/10/13 (filing Oct/Nov 2014)

There is more to it than this with an option in 2012 to 'actual' - not normally used as profits are rising.
Click to expand...

Note that this route will involve tax being charged twice on Nov/Dec 11 profits. Preparing accounts to calendar year end will avoid this problem.

WizardDr said:
I would think you may need an accountant though
Click to expand...

Agree.
 
Thanks guys. I'll be speaking to an accountant tomorrow morning.
 
@TMcGibney - does a sole trader have a choice in year 1 and 2?
Would he not have to delay commencement?
 
does a sole trader have a choice in year 1 and 2? - Yes
Would he not have to delay commencement?- No, why not??
 
WizardDr said:
@tmcgibney
Isn't year 1 'actual' - ?
Year 2 first twelve months?
Click to expand...

Year 1: "You are taxed on the profits of the trade, profession or vocation from the date your business commenced to the following 31 December."([broken link removed] page 15)

Year 2: "You are taxed on the profits of a twelve month period, ending in the second tax year. Generally, you are taxed on the basis of the profits for the first year of trading. Where accounts are made up to a number of dates within the second year, special rules apply. You will be taxed on the profits of the twelve months to the latest accounting date ending in the tax year or on the profits of the tax year. Where no accounts are made up to a date within the tax year, you are taxed on the profits of the tax year."([broken link removed] page 15)

So in the OP's case if they prepare a 2-month set of accounts for 2011, followed by a 12-month set for the 2012 calendar year, the 2011 income falls to be taxed once only, as TMcGibney inferred.

Also want to echo earlier posters' sentiment - OP if you can't fairly easily follow what I just posted above, then you need an accountant - they'll probably save you more money than they'll cost you.
 
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