Hi, can anyone tell me whether I need to include invoices that were invoiced inside the accounting year, when considering corporation tax, even though the cash received was outside of this date, of if I can consider them in the following financial year? Also do I need to include invoices for work carried out inside the financial year, again, even if the invoices were submitted outside of this date?
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Corporation tax is based on the company's profits as per accounts prepared under accounting standards which show profits/losses for a period based on value of work done and costs incuured. So, yes, you have to account for all invoices unpaid at year end AND for uninvoiced work done, accruals and prepayments, It would be very rare for a company's affairs to be so simple that accounts and tax were based solely on monies paid/received in the year without any such adjustments being needed. -
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My understanding is that you have to consider work supplied during that year, even if the invoice is raised in the following year. Even if you don't raise an invoice at the time of preparing your accounts, you still have to account for it as an "asset" - based upon how much you expect to receive. If you never receive the money, it's considered a bad debt which is accounted for seperately.
Which makes your question a slam dunk yes - invoices raised in a year definately count - even if they haven't been paid by year end.
VAT (cash accounting method) and IR35 PAYE is a bit different. It's based from the day the cash becomes available to your business - for BACS transfers, this is the day it lands in your business account.Comment
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Thanks for the advice, it's as I suspected.Comment
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