Please can someone give me the appropriate procedure in the following case I currently have with my client...
I am currently in the process of organising my client's documents for this year's SA tax return, but I have a query.
One of his receipts is for April 2013 and is dated on the 4th April 2013. Looking back to the previous tax year no entry was made for this payment in my account software.
The question's I have are:
"Can I account for this in this tax year?" and "Should I enter it in my accounting software?"
All answers are welcome, but of course the correct one is what I want?
The question has to be was it material to either the P&L or B/S. i.e. more then 0.5% of turnover, 1% of total assets or 5% of pre tax profit?
Assuming that this is an immaterial receipt that was only two days before the year end then nobody is going to thank you for the work and associated cost of restating and refiling the accounts and applying adjustments to tax returns. I would include it as though incurred on the 6th of April.
Note that matters may also be material by intent rather than amount and even insignificant amounts should be restated in the correct period if there was any intent to adjust the perceived reality of the business to others, in the question a missed receipt will mean that HMRC may have been paid too much but conversly it could have been missed in order to bolster profits to support a loan. Just something to be wary of in such situations when assuming a simple and completely innocent error of ommission.
My conclusion would be that unless there is anything about the ommission to suggest otherwise then to include the receipt in the current period.
HTH,
Shaun.
p.s. been a while David, hope that you aere well.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Tut, sneaking in with your one line answers Michelle...
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I don't think HMRC would mind that they got more tax in the previous year from the omission - technically, the tax payer could request interest from HMRC for the overpaid tax!
