return date issue

ChicoMendez

Hi

I started in business at the end of october 03.

Im now doing my first set of returns for
1) Income Tax for 04
2) Preliminary Tax for 05

However for those two months of 03 (where i essentially did NOTHING only register) do i have to fill out anything ? surly i dont have to do an annual return??

Tnx

ButtermilkJack

I would have thought you would have to file returns from the day you started 'trading', regardless of activity. Officially you are registered as an active business from October '03 to December '03 so the revenue should have looked for returns. Although having said that, any returns for 2003 would surely have to be paid by October '04, so if they didn't contact you yet......

I'm not sure though, as this is my first year also and I'm still not sure what I need to do regarding prelim tax for '05. Just don't know what's it's all about.

Are there forms available, or do I just calculate the figure myself based on my accounts and go to ROS and pay online?

ChicoMendez

ButtermilkJack wrote:

I'm not sure though, as this is my first year also and I'm still not sure what I need to do regarding prelim tax for '05. Just don't know what's it's all about.

Are there forms available, or do I just calculate the figure myself based on my accounts and go to ROS and pay online?

Ya i think so... ive mine just about calculated so i will just pay online... and considering i did not fill out the form to allow me to pay via DD .. iv to pay all at once

ButtermilkJack

Ah, sweet relief!!

I just found this on the revenue website ("it10_03.pdf")....

"New Registration
If you are registering for Self Assessment you may have difficulty in calculating your Preliminary Tax due in your first year or indeed you may register for tax after the 31 October deadline date. Interest will not be charged if you do not pay Preliminary Tax in your first year. However, it is recommended that you pay Preliminary Tax as near to the final tax liability as you can estimate. In your second tax year you must comply with the 90%, 100% or 105% rule in order to meet your Preliminary Tax obligations."

That's just freed up my weekend!!

BTW, If I decide to pay anyway if I get it done, how do treat bank charges? I know income tax is calculated ex-vat, so are the charges on my statement inc. vat? Do I just get the ex-vat cost and use it!

Also, what about interest on bank loans?

ButtermilkJack

Oh my god my head is a mess. I've just re-read the above and now I think it means I do have to pay, but will not be penalised if its below 90%?

Cr*p! Back out with the calculator......

ChicoMendez wrote:

Ya i think so... ive mine just about calculated so i will just pay online... and considering i did not fill out the form to allow me to pay via DD .. iv to pay all at once

How long did it take you to calculate?

ChicoMendez

ButtermilkJack wrote:

Oh my god my head is a mess. I've just re-read the above and now I think it means I do have to pay, but will not be penalised if its below 90%?

Cr*p! Back out with the calculator......

How long did it take you to calculate?

well ive been fiddling with my xls for the last week or so - improving and correcting thinks here and there all week.

if you have the figures it should be easy enough... in theory anyhow!!

karangka

Prepare a tax calculation and pay the premliminary tax based on 100% liability.

Mind you, with the online filing system that exist nowadays, the penalty is calculated automatically. Previously, you 'may' be charged interest and penalties. But now, you'll definitely will get stung.

If you want help, just PM me.

ChicoMendez

karangka wrote:

Prepare a tax calculation and pay the premliminary tax based on 100% liability.

Mind you, with the online filing system that exist nowadays, the penalty is calculated automatically. Previously, you 'may' be charged interest and penalties. But now, you'll definitely will get stung.

If you want help, just PM me.

right we gotta pay 100% liability ?? is there any margin for error here? any at all considering there is still two months left in the year and alot of my work is done over the net ... i could get a job to do tomorrow or i could not so forecasts are a little unsure...

Tnx

karangka

Mate,

The 100% liability is just based on your 2004 income, i.e tax liability for Oct 03 to Oct 04. So, no element of estimation here.

ButtermilkJack

I thought the tax year was Jan 1 to Dec 31. Now I'm really confused

karangka

Okay,

Let me explain. For a PAYE payer, their tax year is from 01/01/xx to 31/12/xx. For a trader, their tax year is their accounting date. Let say if someone accounting year is from 01/10/03 to 30/09/04. The tax liability for 2004 is income earned during that period. Income earned from 1/10/04 to 30/09/05 falls under 2005 tax return.

In the case of ChicoMendez, his accounting year will be from 01/10/03 to 30/09/04. In his tax returns for 2004, he will declare income earned between this period. He will pay tax for his liability for 2004 tax. He will also pay Preliinary Tax 2005 based on his 2004 liability. Let say his liability for 2004 is e2000. Then he will pay e4000. e2000 for 2004 tax and e2000 for 2005 Preliminary Tax. However, if he reckon that he will not earn as much as in 2004 is 2005(1/10/04 to 30/09/05), he can just pay an estimated liability which should be not less than 90% of the total liability that will actually be. Any overpayment will be refunded.

Btw, since his 2005 accounting year should have been finished in Sept 05, he can actually canculate his actual liability for 2005. Let say after looking at the figures for 2005 his liability say e5000, then he can either pay e4500 (90% 2005 liability) for his Preliminary tax or pay e2000 (100% 2004 liability). It may seem its better just to pay e2000, but if he got the cash, then why not just pay e4500 or e5000 to avoid future cashflow problems.

Hope this helps.

ChicoMendez

karangka wrote:

Okay,

Let me explain. For a PAYE payer, their tax year is from 01/01/xx to 31/12/xx. For a trader, their tax year is their accounting date. Let say if someone accounting year is from 01/10/03 to 30/09/04. The tax liability for 2004 is income earned during that period. Income earned from 1/10/04 to 30/09/05 falls under 2005 tax return.

In the case of ChicoMendez, his accounting year will be from 01/10/03 to 30/09/04. In his tax returns for 2004, he will declare income earned between this period. He will pay tax for his liability for 2004 tax. He will also pay Preliinary Tax 2005 based on his 2004 liability. Let say his liability for 2004 is e2000. Then he will pay e4000. e2000 for 2004 tax and e2000 for 2005 Preliminary Tax. However, if he reckon that he will not earn as much as in 2004 is 2005(1/10/04 to 30/09/05), he can just pay an estimated liability which should be not less than 90% of the total liability that will actually be. Any overpayment will be refunded.

Btw, since his 2005 accounting year should have been finished in Sept 05, he can actually canculate his actual liability for 2005. Let say after looking at the figures for 2005 his liability say e5000, then he can either pay e4500 (90% 2005 liability) for his Preliminary tax or pay e2000 (100% 2004 liability). It may seem its better just to pay e2000, but if he got the cash, then why not just pay e4500 or e5000 to avoid future cashflow problems.

Hope this helps.

tnx that was a great help - as i made almost nothing in 04 and 05 is alot better ill be going the 90% rule as i have the cash and dont want to drink it all before next year!!


However re my accounting dates - When i log into ROS my dates 01/01 - 31/12.

can i go with these dates as it simplifies things and besides for those first two months i did feck all??

Tnx

karangka

ChicoMendez,

Yes you may. But just assume your first tax year are from 01/10/03 to 31/12/04. You will have to do a revise calculation in for your 2005 return next year.

It is quite long to explain. But, as you did not earn anything is 2003 (business), than it'll be quite simple for you.