Income: is it based on period worked, invoice date, or when received?

johnnyivan

Hi All,
Can anyone give me the definitive answer on this?

When I enter my sole trader income for 2010, is that based on any invoices dated in 2010 - or on payments actually received in 2010 - or even when the money actually cleared in the account, in 2010?

I'm getting coflicting opinions so I asked Revenue:

"It's based on when you received the money" he said.
"Are you sure" I asked?
"I'll just go and check." he replied.

---

He returned, "It's based on the period in which you worked for that money."
"Are you sure?" I asked again.
"Yes, it's on the revenue website in the guide for the self-employed." he assured me.
"I haven't seen it - can you tell me exactly where it is?"
"No I can't, sorry." he said.

maddogcollins

"Sales/receipts/turnover - this is gross trading income receivable" - i.e any money earned or due to you (i.e invoiced) for the year.

Any invoice written for 2010 work done will be included as income in 2010. If you have a balance sheet then any money you have not yet physically received will be a Debtor.

So in your income you will have:
All cash/cheques etc... received for 2010 worked carried out
A Debtor of €xyz for work carried out in 2010 but not received i.e recievable. (Then if the cash comes in in 2011 it will be offset against the debtor and not included as income in 2011 as you have already accounted for it in 2010).

Hope that helps a bit.

johnnyivan

Hi There, thanks for this.
So what would the columns and their headings be?

Perhaps there's an image online that I could look at for an example?
Thanks
John

maddogcollins

In your income you will still only have one heading - Sales/Income.

You can have seperate workings for Debtors. If you want to PM me an email address I will send you a sample excel sheet of how I would set it up.

johnnyivan

Thanks - will do

johnnyivan

I've been told that a small - under €1,000,000 p/a turnover - business can opt for 'cash-based' accounting on the tax return.

Sounds good to me.
John

johnnyivan

Oh, this might just relate to VAT. For which I'm ineligible at present.

ssbob

Johnny,

Some people just don't bother invoicing until the money is received however your income is based on invoices and credit notes in the period ie. 2010.

Mr. Incognito

taxed in the year to which it relates,

sole traders pay their tax the following year so it's not an issue if received late,

if you are over the VAT thresholds you can apply for cash received basis for VAT purposes.

I had to laugh at the call to revenue. People have this all knowing eye of sauraman view of revenue but in fact the guys on the phone know less than you! fact!

Gloomtastic!

You didn't trust our advice over on CI then Johhny?
Shame!

kennyb3

Mr. Incognito wrote: »

People have this all knowing eye of sauraman view of revenue but in fact the guys on the phone know less than you! fact!

Agreed, most of the people you ll get on the phone are junior officers who know very little and if you ask them anything they either say 'hang on a minute' and ask someone who does know or the now classic ' send that in an e mail to us'.

barneystinson

Mr. Incognito wrote: »

I had to laugh at the call to revenue. People have this all knowing eye of sauraman view of revenue but in fact the guys on the phone know less than you! fact!

kennyb3 wrote: »

Agreed, most of the people you ll get on the phone are junior officers who know very little and if you ask them anything they either say 'hang on a minute' and ask someone who does know or the now classic ' send that in an e mail to us'.

As with any large organisation, when you ring the switch, the phone is likely to be answered by the most junior, and therefore least knowledgeable people. Whether or not the person who answers the phone to you knows less than you do, will depend on who you are and how much you know...! For example I'm sure a qualified and well paid professional accountant / tax consultant will, and indeed should, know more than a lowly clerical officer on the phone in Revenue who gets paid 22k - 33k, who has no real motivation or incentive to know any more than they need to to get by, and whose taxes training may be quite limited. Some of the people on the phone are very knowledgeable in certain areas, and won't have a clue about other areas, depending on what area they work in when they're not answering the phone.

Also, like any large (and many small) organisations, the level of knowledge, capability and pride in one's work varies widely - I always used to make sure to get the names of anyone who I found helpful on the phone and try to get their direct line, although obviously thats no real help to Joe Public who only has to ring the tax office once every year or two...

johnnyivan wrote: »

I'm getting conflicting opinions so I asked Revenue:

"It's based on when you received the money" he said.
"Are you sure" I asked?
"I'll just go and check." he replied. <So in other words, No, I'm not sure... I'll go and ask someone who I know will know>

---

He returned, "It's based on the period in which you worked for that money." <Having been told the right answer>
"Are you sure?" I asked again.
"Yes, it's on the revenue website in the guide for the self-employed." he assured me. <Repeating what he's obviously been told by the go-to guy>
"I haven't seen it - can you tell me exactly where it is?"
"No I can't, sorry." he said. <Because he doesn't know exactly where it is, and he's not gonna go bother the other person a second time>