Declared income in 08-09 yr when should have done in 09-10 yr

bitsandpieces

Just checking my tax return for the 09-10 year before submitting. I've realised I've made a stupid mistake: I declared a small (about £60, but paid in $US) income from some self-employed work in the 08-09 year when I should have declared it in the 09-10 year (the work was done in the earlier year but I invoiced and was paid in the later year).

Any idea what the best thing to do here is? Phone/write to HMRC to tell them about my mistake? We're clearly not talking a vast some of money here (I haven't gained anything from my error) and I don't want to get into trouble over about £15 of tax :rotfl:

BoGoF

Did you file your Tax Return online? If so, you can go in and correct it yourself (as long as you do it before 31 January 2011).

In all honesty HMRC won't be bothered for the sums involved and you could safely leave as is.

bitsandpieces

I did file online, thanks - will look to correct it there, assuming that's the best approach.

I appreciate we're not talking a major tax avoidance scheme here :rotfl: I'd feel better if this was done right, though

BoGoF

bitsandpieces wrote: »

I did file online, thanks - will look to correct it there, assuming that's the best approach.

I appreciate we're not talking a major tax avoidance scheme here :rotfl: I'd feel better if this was done right, though

The only alternative to you making the amendment is to write to them, it would be much quicker to DIY.

Mikeyorks

bitsandpieces wrote: »

Any idea what the best thing to do here is?

As the final sentence of post #2 ............. just let it lie. It makes no difference in the final analysis so I would just leave it alone ... having made a note on your own records.

chrismac1

"(the work was done in the earlier year but I invoiced and was paid in the later year)."

Google "Accrued Income" which is what this is. Your 08-09 return was in fact accurate in my view. One thing I check as routine for all accounts is the cut-off of sales and expenses. So in this case, work done not yet invoiced would be taken to accrued income and sales providing it had been accepted in some way by the customer or client.

Cook_County

Of course many other numbers may be incorrect if you incorrectly used a cash accounting method - but this one was right.

Pennywise

The matter in question was rightly declared. I wonder whether other things were wrong though - you should have filled in your tax return on the basis on monies earned and incurred, not invoice dates nor payment dates - almost inevitably you'd have several adjustments for unpaid invoices, work in progress, accrued and prepaid expenses, etc. I'd have a good look at other things to see whether there are other corrections you need to make as it appears you've been wrongly assuming your tax return is based simply on payments & receipts in the year.

bitsandpieces

Please ignore - have checked docs now and correct info posted below.

bitsandpieces

Pennywise wrote: »

The matter in question was rightly declared. I wonder whether other things were wrong though - you should have filled in your tax return on the basis on monies earned and incurred, not invoice dates nor payment dates - almost inevitably you'd have several adjustments for unpaid invoices, work in progress, accrued and prepaid expenses, etc. I'd have a good look at other things to see whether there are other corrections you need to make as it appears you've been wrongly assuming your tax return is based simply on payments & receipts in the year.

Thanks. When I'd phoned HMRC to ask which year to declare income as falling in, they told me that the tax year to declare this work in was the year I got paid un :eek:

It looks like - assuming self-employed work done in two tax years but paid in one should be declared as falling across both tax years - there may be an issue with one other piece of work done across the 07-08 and 08-09 tax years but paid in the 08-09 year. This is only an issue with declared income - I wasn't incurring enough expenses to bother claiming - but actually means I've paid a bit more tax than I need to (if I could have declared some of this income as falling in the 07-08 year - when some of the work was done - I would have paid less tax overall). Time to write to HMRC, I guess? Anyone got a link to an authoritative doc explaining the situation with such income?

Pennywise

bitsandpieces wrote: »

Anyone got a link to an authoritative doc explaining the situation with such income?

http://www.hmrc.gov.uk/helpsheets/hs222.pdf

http://en.wikipedia.org/wiki/Accrual