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Where Taxpayers and Advisers Meet

Prepayments

CG
Posts:194
Joined:Wed Aug 06, 2008 3:33 pm
Prepayments

Postby CG » Tue Jan 06, 2009 11:38 am

A photographer has to pay for a stand at a show 6 months before the show. The payment is in one accounting period (year to 31 January 2008) but the show is in the next accounting period in the February. Does this mean the payment cannot be included in the accounts to 31 January 2008?

The payment is a total of £1,700 which is a significant expense to the small business.

robbob
Posts:3092
Joined:Wed Aug 06, 2008 4:01 pm

Re: Prepayments

Postby robbob » Tue Jan 06, 2009 11:52 am

Hello CG

I would treat this as a prepayment.
If the photographer were to cancel his booking before the end of 31/1/08 and was left with a cancellation fee then this would be allowable in the earlier period.

CG
Posts:194
Joined:Wed Aug 06, 2008 3:33 pm

Re: Prepayments

Postby CG » Tue Jan 06, 2009 11:59 am

Thanks Robbob.

It seems harsh to treat it this way as it is such a large amount to a relatively small turnover and a whole year must be waited to benefit from offsetting it, however it IS a prepayment so must be treated so - thanks for confirming this.

taxattack
Posts:309
Joined:Wed Aug 06, 2008 3:44 pm

Re: Prepayments

Postby taxattack » Tue Jan 06, 2009 3:01 pm

Thanks Robbob.

It seems harsh to treat it this way as it is such a large amount to a relatively small turnover and a whole year must be waited to benefit from offsetting it, however it IS a prepayment so must be treated so - thanks for confirming this.
I agree with Robbob, but a relatively drastic solution might be to change the year end to include the date of the show.

Chris


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