Cheque accounting date

[Archangel]

If I write a cheque today from my business account which is not cashed for say 4 weeks but in the meantime my company year end falls, which company year would the expense be in?

thanks

[Lance]

If I write a cheque today from my business account which is not cashed for say 4 weeks but in the meantime my company year end falls, which company year would the expense be in?

thanks

it depends.
If you do cash accounting it will always fall when the cash has gone.
If you do invoice accounting it falls when the invoice was raised by the vendor.

If this a wheeze to avoid tax, it falls at the time the cash leaves the company, unless there is a valid invoice and you do invoice accounting.

What does your accountant say?

IANAA

[Archangel]

Thanks for the response

I’m on cash accounting.

it’s a pension payment that I’d like to get in this years accounts but if it’s dependent on when the pension company cash the cheque then I’ll make the payment via BACS (if possible, the pension company suggest cheque)

I parted company with my accountant when he cost me a bucketful of tax.

[philip@wellwoodhoyle]

You can't use cash accounting for a limited company, only sole traders and partnerships.

So it doesn't matter when the cheque is cashed. What matters is the date you send the cheque along with the official date on the pension company paperwork, i.e. the date on the paper application form (which I'm sure you will have taken a copy of for your files).

[Archangel]

You can't use cash accounting for a limited company, only sole traders and partnerships.

So it doesn't matter when the cheque is cashed. What matters is the date you send the cheque along with the official date on the pension company paperwork, i.e. the date on the paper application form (which I'm sure you will have taken a copy of for your files).

thank you for your input. I’ve not sent the paperwork yet, so I can certainly take a copy.

I assume you are referring to “cash basis” rather than “cash accounting”, the latter is certainly available to limited companies as long as the turnover is less than £1.35million

[northernladuk]

If I write a cheque today from my business account which is not cashed for say 4 weeks but in the meantime my company year end falls, which company year would the expense be in?thanks

Forgetting the cash/invoice accounting thing for a minute. Haven't they improve cheques beyond written dates and 4 weeks cashing them? Does that still happen in this day and age? Are you thinkng about the date you put on the cheque or the day it's received by whoever? I can't see how playing silly games with cheques is going to wash, particularly when it is a thinly veiled way of getting around something.

[Craig@Clarity]

Account for the cheque when you write it so if it was today's date, you account for the payment today in your accounts. It's called "Cheque in Transit".

[philip@wellwoodhoyle]

thank you for your input. I’ve not sent the paperwork yet, so I can certainly take a copy.

I assume you are referring to “cash basis” rather than “cash accounting”, the latter is certainly available to limited companies as long as the turnover is less than £1.35million

Cash accounting for VAT doesn't translate into cash basis or cash accounting for company accounts/corporation tax which always have to be on the accruals basis.

[Lance]

You can't use cash accounting for a limited company, only sole traders and partnerships.

So it doesn't matter when the cheque is cashed. What matters is the date you send the cheque along with the official date on the pension company paperwork, i.e. the date on the paper application form (which I'm sure you will have taken a copy of for your files).

thank you for the correction. I wasn't aware that LTDs couldn't use.
Not that I think anyone would ever want to use it. Too inflexible to my mind.