starting tax self assessments?

d.ylan

Hi All

I wonder if anyone is anyone knows any more information on this..

My mate has just begun taking on specialist freelance work as a sole trader for his full time income after quitting his PAYE job.

He dropped the taxman a line to register as self employed, and he is not overly familiar with self assessment, to ask when he needs to complete one.

The taxman has said that if he commences trading before April 2006 he needs to complete a January 2006 Self Assessment form, but the deadline would be three months from issue, not January...

This left me a little perplexed, as my understanding was that he could complete his first self assessment form the January after the financial year. so from Jan 06 - Apr 06, he would complete the form for January 07..? Am I completely wrong in saying this to him now, as neither of us could understand how he is supposed to complete a self assessment that covers up untill April2006 untill that date has passed and he knows what business he's conducted... do you think there's a chance there was just an error in the dates given by the tax man, or is he actually supposed to fill a return in now taking him up till April, even though any accounting for that time would of course be pure speculation at this point?!

As mentioned, I'm leaning toward there just being a misunderstanding, just wondered if anyone else could shed any light while he awaits a further response from I R Taxman?

many thanks as ever!

CIS

I started self employment in march 2005, I completed the 2004/05 form and listed the self employment details from March 05 - April 05 , using the normal return deadlines for the 2004/05 Tax Year SA.

I then need to complete one each year for the period April to April.

Cook_County

I suspect that without realising it that you are confusing 2 quite different items.

1. A tax return is normally due on 31 January following the 5th April. The due date may be later if HMRC issue the form later on, although tax remains due on that 31 January and the following 31 July whether or not a form is issued.

2. A business can choose any accounting date it wishes. CIS has chosen an accounting year ending 5th April, but you are free to choose an accounting date ending 31 December, the first anniversary of commencment, your best friends birthday or any other date that you find convenient. You will in practice choose the date that gives you the greatest amount of tax savings, but will also need to consider the effect of overlap relief. For tax purposes an accounting date ending 30th April is often most advantageous, but each business will need to make its own decison.

ctm_2

d.ylan, your understanding is correct. His self employment started in the current tax year, the year which will end 5 April 2006. He will be issued with a return after that date which will be for the year 6 April 2005 - 5 April 2006, and will heve to be completed by 31 January 2007.