When the tax inspectors ask a business when their financial year end is, does that only apply to a Limited?

Question

Company or can that also apply to a Partnership, Sole Prop, etc?

Answer 1

A sole trader, partnership or company can prepare their financial accounts for any period they wish but HMRC need to know this information so businesses can be assessed no more than 12 months of profits at a time.

For an individuals and partnerships (unincorporated businesses), if the financial year starts on 1 November 2005, it will end on 30 October 2006. The tax return for this period is for the year to 5 April 06, but it will cover the profits of the business during that period of account. There are special rules for commencements and cessations that an accountant can help you with.

For Companies, again, no more than 12 months of profits can be taxed at once, regardless of the duration of the accounts. HMRC need this information to calculate 'accounting periods.' An accounting period starts when a company first comes into charge of corporation tax (earns income e.g. interest on a bank account, has a capital gain or starts to trade) and ends either 12 months later or earlier if the accounts are made up before 12 months or ceases trading. This is a simplistic view.

Seek professional advice on individual circumstances.

Answer 2

Your Tax year end is determined by your trading year not the fiscal year so your trading year might be anytime between Jan 1st and Dec 31st. When we had a business our trading year finished on 27th December so you can imagine how Christmas went for us. Happily, we are now retired

Answer 3

Financial year end for tax purposes in the UK is April 5th.
New tax year starts April 6th.
I did not know that anyone can pick and choose their financial year end date.

Answer 4

ye sit does...