THis year or last?

[GeoSpectrum]

So, if I take and order in March and complete it and take payment in April in the new tax year, which year does that sale get recorded under? Im thinking it must be when you get paid, I'd the new tax year, but I could be wrong.......

[Graysalchemy]

As a limited company it is when the invoice is raised, but in fact you can accrue work carried out in on tax year but not invoiced as the work has been done and you have invoices for the materials etc. I would have thought it would be the same if you were a sole trader.

This is why i cannot stress enough the importance of having a good accountant from day 1. I have seen so many sole traders make costly mistakes because they thought they could get away without having an accountant.

[pramsay13]

Did you raise an invoice?
I don't normally so I record my income when I get the money, doesn't matter when I took the order or made the frame.

[GeoSpectrum]

Yes I raised an invoice so ill take that as the date I think. IIl check with my accountant though, but I thought I'd ask here.

[CanvasChris]

My accountant asks me to list all outstanding invoices unpaid and a list of invoices I haven't paid as of end of day 5th April.

Needless to say I am a better payer than my customers

[Tyto]

The date of the invoice determines which tax year the sale is accounted to regardless of when payment is received

[Jamesnkr]

The date of the invoice determines which tax year the sale is accounted to regardless of when payment is received

Not so. The date the work was done determines the year. It is work in progress (or completed work that has not yet been invoiced). To the extent the work has been undertaken by the year end, then the profit should be accounted for in that year. Here it is from HMRC's guidance.

http://www.hmrc.gov.uk/manuals/bimmanual/bim33020.htm

However, if your turnover is less than the VAT threshold, then you can elect for the cash basis to apply.

(The date on the invoice is the tax point for VAT purposes.)

[GeoSpectrum]

THes was the response from my accountant.

"....We will look at degree of completion of work, on an "accruals" basis....."

Is that work in hand?

[ChrisG]

If you are a sole trader you can operate on a 'cash accounting' basis whereby you only declare income and expenses when money actually comes in and out of the business.

[GeoSpectrum]

thanks Chris, that's useful to know.

[Jamesnkr]

However, if your turnover is less than the VAT threshold, then you can elect for the cash basis to apply.

NB my comment above if using the cash basis. £83,000 is the threshold.

[GeoSpectrum]

Yep, I'm less that that.