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Payments on account and averaging
-
Brightonian
- Posts:137
- Joined:Wed Aug 06, 2008 3:31 pm
I have a client, an author, whose profits fluctuate wildly and therefore I have used averaging on a number of occasions. As it happens, the 2012/13 profits are similar to those for 2011/12 and so cannot be averaged. However, he expects his profits to plummet in 2013/14 and has asked me to look at reducing the payments on account for that year. If I estimate using the likely profits of 2013/14, I can reduce them substantially. However, it looks as though I will be averaging 2013/14 with 2012/13 and therefore the averaged profit for 2013/14 will be much higher than the actual. Should I base my reduction calculation on the averaged profits, rather than the actual profits? Or is there a special provision to cover this situation?
