Tax point for self assessment account - Invoice date VS payment date

Vinylpimpuk

I am doing my first SA tax return, turnover was 40,000k, but I cannot find an answer whether I take the invoice date from my suppliers, or the actual date of payment as the date of debit on my account.

Please help!

Pennywise

Vinylpimpuk wrote: »

I am doing my first SA tax return, turnover was 40,000k, but I cannot find an answer whether I take the invoice date from my suppliers, or the actual date of payment as the date of debit on my account.

Please help!

Payment date is definitely wrong

Invoice date "may" be right if the invoice date is in the same year as the goods/services were supplied/used.

The actual answer is that it's the year in which the goods/services were used/provided, so you also need to adjust for stocks, work in progress and where invoices are dated in a different year from that in which the goods/services were used.

Kynthia

Generally the HMRC expect you to report your finances on an accruals basis. If you look at their site and search for 'accruals basis' information.

An accruals basis is an accounting concept whereby you report income as being due whenever you provide the goods or service that earn this income rather than when you invoice or when you receive the money. Also expenses are reported as being incurred when you actually received the goods or service rather than when you were billed or when you paid.

chrismac1

This question will become a lot more common in 2013-2014. That is because from then on for small businesses it will become optional whether to use the accruals basis or cash accounting basis.

Like most accountants I will continue to use the accruals basis unless instructed otherwise by a client. The reason for this is that my accounts will thus continue to conform - and state that they conform - to international accounting standards.

This may seem like a small matter. But I can see problems where accounts are not being prepared like this where a business then attempts to borrow or get grant finance on the strength of the accounts. Even at present, some of the questions thrown out by our suddenly risk-averse banks are pretty minor. Something as fundamental as the basis of the numbers in the accounts is hardly likely to pass them by.