| when to bank my cheques [message #373799] |
Mi, 22 März 2006 09:23 |
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My year end is 31 March and I have been holding back from banking cheques
this month to roll into next year. Can I bank them on 1 April or do I have
to wait until after 5 April. Or am I not supposed to hold back?
Ken
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| Re: when to bank my cheques [message #373804 ] |
Mi, 22 März 2006 10:07 |
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"Ken" <Reply to NG only> wrote:
> My year end is 31 March and I have been holding back from banking cheques
> this month to roll into next year. Can I bank them on 1 April or do I have
> to wait until after 5 April. Or am I not supposed to hold back?
Strictly speaking your accounts should be kept on the accruals basis.
That means earnings are recorded in the accounting year in which they
were earned, irrespective of when (or indeed whether!) payment is
received.
So you can hold them back, but it won't make any difference to your
P&L account and hence tax position. You can't "roll them into next
year" as earnings, only as a balance sheet asset (sundry debtors).
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| Re: when to bank my cheques [message #373807 ] |
Mi, 22 März 2006 12:38 |
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"Ronald Raygun" <no.spam [at] localhost.localdomain> wrote in message
news:Pt8Uf.40030$wl.13861 [at] text.news.blueyonder.co.uk...
> "Ken" <Reply to NG only> wrote:
>
>> My year end is 31 March and I have been holding back from banking cheques
>> this month to roll into next year. Can I bank them on 1 April or do I
>> have
>> to wait until after 5 April. Or am I not supposed to hold back?
>
> Strictly speaking your accounts should be kept on the accruals basis.
> That means earnings are recorded in the accounting year in which they
> were earned, irrespective of when (or indeed whether!) payment is
> received.
>
> So you can hold them back, but it won't make any difference to your
> P&L account and hence tax position. You can't "roll them into next
> year" as earnings, only as a balance sheet asset (sundry debtors).
Thanks for help.
Ken
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| Re: when to bank my cheques [message #373828 ] |
Mi, 22 März 2006 19:55 |
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"Ken" <Reply to NG only> wrote:
> My year end is 31 March and I have been holding back from banking cheques
> this month to roll into next year. Can I bank them on 1 April or do I have
> to wait until after 5 April. Or am I not supposed to hold back?
It makes no difference to your tax position.
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| Re: when to bank my cheques [message #373846 ] |
Do, 23 März 2006 11:39 |
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Holding the cheques back should not make any difference as you have to
bring them in as accrued income in any event. If you deliberately held
them back and you did not account for them as accrued income then you
are potentially being negligent (at best) or fraudulent (at worst) in
not declaring all of your income for the accounting year.
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| Re: when to bank my cheques [message #373932 ] |
Sa, 25 März 2006 11:00 |
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Ronald Raygun wrote:
> "Ken" <Reply to NG only> wrote:
>
>
>>My year end is 31 March and I have been holding back from banking cheques
>>this month to roll into next year. Can I bank them on 1 April or do I have
>>to wait until after 5 April. Or am I not supposed to hold back?
>
>
> Strictly speaking your accounts should be kept on the accruals basis.
> That means earnings are recorded in the accounting year in which they
> were earned, irrespective of when (or indeed whether!) payment is
> received.
AIUI it's the date on your invoice for the work done which in effect
determines which tax-year the eaarned money falls into.... is that not
right?
So if you did work for a client for all of February and March, but
didn't send in the invoice till 6 April, then that would be the legit
way to 'roll' such payments in to the following year?
David
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| Re: when to bank my cheques [message #373936 ] |
Sa, 25 März 2006 11:33 |
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Lobster wrote:
> Ronald Raygun wrote:
>> "Ken" <Reply to NG only> wrote:
>>>My year end is 31 March and I have been holding back from banking cheques
>>>this month to roll into next year. Can I bank them on 1 April or do I
>>>have to wait until after 5 April. Or am I not supposed to hold back?
>>
>> Strictly speaking your accounts should be kept on the accruals basis.
>> That means earnings are recorded in the accounting year in which they
>> were earned, irrespective of when (or indeed whether!) payment is
>> received.
>
> AIUI it's the date on your invoice for the work done which in effect
> determines which tax-year the eaarned money falls into.... is that not
> right?
I think that may be right for VAT purposes.
> So if you did work for a client for all of February and March, but
> didn't send in the invoice till 6 April, then that would be the legit
> way to 'roll' such payments in to the following year?
No, I think for IT/CT purposes the work done but not yet invoiced
would need to be accrued as "work in progress".
Think about the implications. Say you had staff which did the
actual work, and suppose you paid them on a weekly basis, and
they were laid off for the whole year except Feb/Mar, and this
was the only activity your company engaged in that tax year.
Your accounts would then show a loss this year to the tune of
your staff wages and expenses, while for next year, in which the
company did no work at all, they would show a profit equal to the
client's invoice.
It's in order to prevent this kind of distortion that accruals exist.
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| Re: when to bank my cheques [message #373941 ] |
Sa, 25 März 2006 12:09 |
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"Lobster" <davidlobsterpot601 [at] hotmail.com> wrote in message
news:ix8Vf.14590$H%3.8225 [at] newsfe5-gui.ntli.net...
> Ronald Raygun wrote:
>> "Ken" <Reply to NG only> wrote:
>>
>>
>>>My year end is 31 March and I have been holding back from banking cheques
>>>this month to roll into next year. Can I bank them on 1 April or do I
>>>have
>>>to wait until after 5 April. Or am I not supposed to hold back?
>>
>>
>> Strictly speaking your accounts should be kept on the accruals basis.
>> That means earnings are recorded in the accounting year in which they
>> were earned, irrespective of when (or indeed whether!) payment is
>> received.
>
> AIUI it's the date on your invoice for the work done which in effect
> determines which tax-year the eaarned money falls into.... is that not
> right?
>
> So if you did work for a client for all of February and March, but didn't
> send in the invoice till 6 April, then that would be the legit way to
> 'roll' such payments in to the following year?
It would be a way that would probably work.
It isn't a legit way. It's an incorrect accounting practice that
you could be penalised for if discovered (which it probably
wouldn't be)
tim
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| Re: when to bank my cheques [message #373961 ] |
Sa, 25 März 2006 17:48 |
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>AIUI it's the date on your invoice for the work done which in effect
>determines which tax-year the eaarned money falls into.... is that not
>right?
No 'fraid not. Until the work is 'completed' it is work-in-progress
which means that it goes into the balance sheet at cost (including
overheads). However from the moment the work is complete it should go
in at its selling price, viz the figure at which you will invoice to
your customer (ex VAT). You therefore recognise the profit at
completion of the work. However if it is 'long term' work-in-progress
then you need to recognise profit as the contract progresses. The
invoice date is only relevant for VAT purposes. However if you provide
services rather than goods, then you now need to recognise profits as
the contracted work proceeds.
Not simple!
If the amounts we are talking about are significant to your profits do
not rely on HMRC not finding out about delaying the recognition of
profits. You would be surprised how they can find out about things.
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| Re: when to bank my cheques [message #374000 ] |
So, 26 März 2006 11:01 |
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On Wed, 22 Mar 2006 08:23:29 -0000, "Ken" <Reply to NG only> wrote:
>My year end is 31 March and I have been holding back from banking cheques
>this month to roll into next year. Can I bank them on 1 April or do I have
>to wait until after 5 April. Or am I not supposed to hold back?
>
>
>
>Ken
>
You're supposed to bank cheques when you get them and not mess around.
--
Peter Saxton from London
peter [at] petersaxton.co.uk
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| Re: when to bank my cheques [message #374009 ] |
So, 26 März 2006 13:36 |
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>You're supposed to bank cheques when you get them and not mess around.
There's nothing wrong with holding cheques. There is no logical reason
why you should do it but there's nothing wrong so long as you
reciognise them within current assets in your balance sheet.
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| Re: when to bank my cheques [message #374023 ] |
So, 26 März 2006 04:27 |
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SandalsMan wrote:
>>AIUI it's the date on your invoice for the work done which in effect
>>determines which tax-year the eaarned money falls into.... is that not
>>right?
>
> No 'fraid not. Until the work is 'completed' it is work-in-progress
> which means that it goes into the balance sheet at cost (including
> overheads).
Not any more, read UITF 40.
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| Re: when to bank my cheques [message #374026 ] |
So, 26 März 2006 16:41 |
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>Not any more, read UITF 40.
Well I realise that, and that's why I put this in there: "However if
you provide
services rather than goods, then you now need to recognise profits as
the contracted work proceeds."
I was trying to keep it simple as possible, but nothing is ever that
simple! Please re-read my original posting. UITF 40 applies to the
provision of services rather than material products.
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| Re: when to bank my cheques [message #374039 ] |
So, 26 März 2006 19:48 |
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In message <l2mc22l7a9foub83apcpp9ia7fqbmh22t6 [at] 4ax.com>, Peter Saxton
<peter [at] petersaxton.co.uk> writes
>You're supposed to bank cheques when you get them
Where does it say that then?
--
John Boyle
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| Re: when to bank my cheques [message #374046 ] |
So, 26 März 2006 21:06 |
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On Sun, 26 Mar 2006 18:48:44 +0100, john boyle
<john [at] johnboyle1.demon.co.uk> wrote:
>In message <l2mc22l7a9foub83apcpp9ia7fqbmh22t6 [at] 4ax.com>, Peter Saxton
><peter [at] petersaxton.co.uk> writes
>
>>You're supposed to bank cheques when you get them
>
>Where does it say that then?
Same place where is says dont put received cheques on a bonfire.
--
Peter Saxton from London
peter [at] petersaxton.co.uk
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| Re: when to bank my cheques [message #374052 ] |
So, 26 März 2006 22:03 |
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"Peter Saxton" <peter [at] petersaxton.co.uk> wrote in message
news:chpd22d0hdj0allpop6hmmod64nmdjr0vs [at] 4ax.com...
> On Sun, 26 Mar 2006 18:48:44 +0100, john boyle
> <john [at] johnboyle1.demon.co.uk> wrote:
>
>>In message <l2mc22l7a9foub83apcpp9ia7fqbmh22t6 [at] 4ax.com>, Peter Saxton
>><peter [at] petersaxton.co.uk> writes
>>
>>>You're supposed to bank cheques when you get them
>>
>>Where does it say that then?
>
> Same place where is says dont put received cheques on a bonfire.
Someone did that with one of mine.
Saved me 15 pounds.
tim
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| Re: when to bank my cheques [message #374058 ] |
Mo, 27 März 2006 01:32 |
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In message <48oabjFleiphU1 [at] individual.net>, "tim (in sweden)"
<tim_in_sweden2005 [at] yahoo.co.uk> writes
>>>Where does it say that then?
>>
>> Same place where is says dont put received cheques on a bonfire.
>
>Someone did that with one of mine.
>
>Saved me 15 pounds.
Ah! That would be the bank's charge for bouncing it I assume! :-)
--
John Boyle
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