calculation of 09 Income levy on 08/09 abridged accounts

Sligophoto

Where a sole traders set of accounts is based on the old Tax year (i.e. Apr-mar each year) should the Income levy for the 2009 return be based on 3/12ths of the 08/09 yearly accounts given that 9/12th of those accounts are in 2008, before the Income levy was introduced. or will the revenue charge the composite rate of 1.67% on the full 12 months. If it is on the full 12 months, this would seem to be unfair on sole traders whose business accounts are still based on the old tax year.

nompere

The levy is charged, at the composite rate, on the income that is being assessed for the year.

It's swings and roundabouts really.

When tax rates are going up then therre is apparently an unfairness as you outline. When rates are going down, and until the last couple of years that was mostly the case, there is apparently a bonus for the taxpayer.

But what is happening is that the income of a 12 month period is being charged to tax for a year. Revenue allow the trader to pick his own date on which to measure that period of 12 months.

And it is to prevent people from trying to take advantage of the system that Revenue have complicated "change of accounting date" rules that (almost always) work in their favour.

Sligophoto

Thanks Nompere, no one in our tax office actually has an answer to this which seems strange.