New Cash Basis Accounting

Coffeecup01

Hi,
Hoping someone can help with this cash basis accounting method.

I am self employed and have just pulled out my self assessment to complete and noticed this new box.

I currently work for 2 different companies and I invoice in arrears. For example for March 2016 I invoice on the 15th April and get paid by both companies on the 30th of April. I've always put this in the tax year that I invoice. So in this case 2016-2017.

Now I've been reading up and it looks like I should have been putting this in 2015-2016 tax year as work in progress . Is that correct or is it ok to go into 2016-2017 as that's when I invoiced the companies. Worried I've been doing my tax returns incorrectly for the last 10 years !!!

As my accounts are relatively simple, I have no stock, no goods, it's purely me as a service, I have approx 24 invoices and year a few hundred pound in expenses, shall I now tick the cash accounting method box on the tax return. I can't see that it will make any difference to the way I process my accounts. I can't see that I would have to make any adjustments either.

Any advice please.

Thanks

antrobus

Coffeecup01 wrote: »

...Now I've been reading up and it looks like I should have been putting this in 2015-2016 tax year as work in progress . Is that correct or is it ok to go into 2016-2017 as that's when I invoiced the companies. Worried I've been doing my tax returns incorrectly for the last 10 years !!!

Technically, yes, you have been doing your accounts wrong. But I wouldn't worry about it. HMRC don't really care about that sort of thing.

Coffeecup01 wrote: »

...As my accounts are relatively simple, I have no stock, no goods, it's purely me as a service, I have approx 24 invoices and year a few hundred pound in expenses, shall I now tick the cash accounting method box on the tax return.....

In your case, I don't think it would make much difference if you went for the cash basis; you'd end up with pretty much the same profit and tax liability.

Since I'm a if it ain't broke kinda guy, I'd just carry on as before.