Ltd Company - income and related expenses in different c.tax years

mikewestmusician

Hello everyone,
Coming up to corporation tax return time, and with a slightly change of business trading I'm finding that income for quite a few jobs is coming in before the end of one tax year and the related expenses and costs being paid out after - so I'll end up with a large tax bill this year and possibly a loss the next. 
Is there any way in the accounting to even this out?

DullGreyGuy

As a limited company you have to operate on an accruals basis not cash. So if you have sunk costs you should accrue for that even if you've not yet paid it. 

koru

To elaborate on the previous comment, you should recognise expenses/costs when you incur them, not when you pay them in cash. Debit expense in the P&L, Credit trade creditors. When you pay the creditor, debit trade creditors, Credit cash.