The profit or loss to be reported under the cash basis is found by calculating:
The total amount of receipts that the business received during the tax year,
less the total amount of expenses that the business paid during the tax year.
In simple terms you only need to show money when it comes in or goes out. You don't need to account for debtors or creditors.
If you think it's more appropriate for you to continue using traditional accounting, when the income is earned and when the expenses are incurred, you must let us know this on your tax return. Please see Property income manual 1090
When you enter or leave the cash basis scheme, we use transitional rules to adjust for accrued income and expenses and payments in advance. This makes sure that all income and expenditure is accounted for only once.
There is some excellent guidance, including examples in our Property income manual 1096. Please take a look.
If you have any questions, please ask us below. Please remember not to include any personal details. Thanks!
This message was edited 1 time. Last update was at 02/08/2018 14:40:09