Reply to: Every little helps.

[ASB]

i.e. If one day my euro amount = £7000, and next day it = £6900, then thats £100 less to pay flat rate on (yes, I know its only £14.50)

Are you quite sure about that? Exchange adjustments are just "other income" positive or negative. As such I would expect that to be included in the flat rate turnover. It is business income.

[Nixon Williams]

However, I've since learned you have pay your tax when the money is earned, not when invoiced, so, as tractor said, it would be stupid.

This is a common error we pick up on when we take on a client from accountants who require their clients to use spreadsheets. The period of when the work was done is rarely checked, and so if a client raises an invoice on 1st November for work done in October, this will understate the profits etc.

This probably does not matter too much in the middle of the year, but if this is done at the company's year-end, then if HMRC poke their nose in, they will penalise the company for it.

Alan

[psychocandy]

Because if you have a history of invoicing on the last day of the month and the revenue do a random check on you, it is one of the first things that they look for - intentionally deferred profits.

Well, I never knew that. I tend to invoice when I get around to it (within a few days of course).

Also, since I invoice in Euros, I want the rate to be as bad as possible on invoice day (you have to put converted sterling rate on invoice for VAT purposes). Probably doesnt make too much difference but its this figure that is used for flat rate vat repayment.

i.e. If one day my euro amount = £7000, and next day it = £6900, then thats £100 less to pay flat rate on (yes, I know its only £14.50)

[tractor]

..

Yes - that was my thinking.

6 months at 21%, 6 months at 20%. So, if I was invoicing 10K at end of Oct, 5K would be at 21%, 5K at 20%. If that invoice was delayed till 1 November, it would be 10K at 20%, hence 0.5% saving.

However, I've since learned you have pay your tax when the money is earned, not when invoiced, so, as tractor said, it would be stupid.

I thank you .....

I took the slap so that you don't have to.......

[mudskipper]

It will make not one jot of difference since profits are apportioned on a time basis not when the invoice was raised.

HM Revenue & Customs: Introduction to Corporation Tax


If your Corporation Tax accounting period doesn't coincide with the Corporation Tax financial year
If your accounting period doesn't run from 1 April to 31 March it spans two Corporation Tax financial years. You'll need to apportion your company's taxable profits between the two financial years on a time basis.
For example, if your company's Corporation Tax accounting period runs from 1 July 2008 to 30 June 2009:
The first nine months (274 days) fall into the 2008-09 Corporation Tax financial year. So you'll pay tax on 274/365ths of your taxable profit at the 2008-09 rates.
The remaining three months (91 days) fall into the 2009-10 financial year. So you'll pay tax on 91/365ths of your taxable profit at the 2009-10 rates.

Yes - that was my thinking.

6 months at 21%, 6 months at 20%. So, if I was invoicing 10K at end of Oct, 5K would be at 21%, 5K at 20%. If that invoice was delayed till 1 November, it would be 10K at 20%, hence 0.5% saving.

However, I've since learned you have pay your tax when the money is earned, not when invoiced, so, as tractor said, it would be stupid.

[ASB]

It will make not one jot of difference since profits are apportioned on a time basis not when the invoice was raised.

HM Revenue & Customs: Introduction to Corporation Tax


If your Corporation Tax accounting period doesn't coincide with the Corporation Tax financial year
If your accounting period doesn't run from 1 April to 31 March it spans two Corporation Tax financial years. You'll need to apportion your company's taxable profits between the two financial years on a time basis.
For example, if your company's Corporation Tax accounting period runs from 1 July 2008 to 30 June 2009:
The first nine months (274 days) fall into the 2008-09 Corporation Tax financial year. So you'll pay tax on 274/365ths of your taxable profit at the 2008-09 rates.
The remaining three months (91 days) fall into the 2009-10 financial year. So you'll pay tax on 91/365ths of your taxable profit at the 2009-10 rates.

[JamJarST]

MyCo year end at the end of the month.

Just twigged that if I invoice on 1st November rather than 31 October, I'll save 0.5% corp tax.

You do realise you will have to pay tax on it the next year

[northernladuk]

Guess you mean this. Had no idea it was an issue. Will invoice this year, and, with head hung low, will accept whatever insults NLUK cares to throw at me.

Moi?? I seen you chew other posters up and spit them out with a knot tied in them.. I am keeping schtum on this one

[mudskipper]

Guess you mean this. Had no idea it was an issue. Will invoice this year, and, with head hung low, will accept whatever insults NLUK cares to throw at me.

[mudskipper]

and call you names? At present we can't do that

Hmmm - wonder what that said pre-edit?

Mebbe I'll stay where I am then.

[mudskipper]

Because if you have a history of invoicing on the last day of the month and the revenue do a random check on you, it is one of the first things that they look for - intentionally deferred profits.

Ah, I'm OK then - I have a history of random invoicing.

[tractor]

...

Why? Don't understand why accountant would have a problem with it?

Because if you have a history of invoicing on the last day of the month and the revenue do a random check on you, it is one of the first things that they look for - intentionally deferred profits.

[northernladuk]

Oops - sorry - meant to post in general. Could someone do the needful?

and call you names? At present we can't do that

[mudskipper]

I thought I was being smart once and tried this. My accountant (rightly) slapped me and told me not to be so stupid lol

Why? Don't understand why accountant would have a problem with it?

[tractor]

MyCo year end at the end of the month.

Just twigged that if I invoice on 1st November rather than 31 October, I'll save 0.5% corp tax.

I thought I was being smart once and tried this. My accountant (rightly) slapped me and told me not to be so stupid lol