As we count down to the commencement of 'Making Tax Digital for Income tax' (MTD for IT) many of us are concerned over one aspect of quarterly reporting: how will we report income which is accounted for on different year-end dates?

Take a VAT registered sole trader with rental income. Their VAT quarters fall at month-end, their rental income is reported to 5 April, their sole trade accounts, well, they could have any year-end. Potentially, under MTD for IT, this trader will have to file eight returns a year!

Apart from the possible issues in respect of quarterly reporting under MTD, on a more practical level, why do we retain a 5 April tax year when most other countries have 31 December?

Should we change to 31 December, or more simply, to change to the nearest month-end to the end of the current tax year, i.e. 31 March.

The Office of Tax Simplification has an open call for evidence a policy paper ‘Potential for moving the end of the tax year - Scoping document’.

The results

We ran our poll for two weeks, we asked, Should we change the tax year-end?

The responses were as follows:

Question   Response rate
No, leave it at 5 April  24.61%
Yes, let's go for 31 March  39.56%
Yes, let's go for 31 December  35.86%

Once voting got underway, we found that our team was perfectly divided on the issue. Initial votes from subscribers to this website, who are mainly accounting and tax professionals revealed a slight indifference between 5 April and 31 March. As we opened up and publicised the poll to a wider public audience and more of our subscribers the voting soon established the pattern of the final result. 

We will forward our results to the OTS in due course. Thank you to all who took part.

Useful guides on this topic

Making Tax Digital index
Track the MTD timeline, check eligibility for the Pilot scheme, read our survival guides

Accounting periods and tax basis periods
Which date do I choose? Does it matter? Can I change my accounting date?

Tax Calendar 2021/22
What do you have to do and when this tax year?

Deadlines: Compliance (individuals & companies)
Every UK taxpayer has filing obligations and deadlines. There are penalties for late and inaccurate submissions. What are the deadlines for different types of taxpayer? What penalties can be charged for missing the deadlines?

New business: Sole trader compliance checklist
Starting in business? A new business registration checklist.

Penalties: SA late filing, payment, notification & error
Self Assessment (SA) tax penalties: what penalties are due for outstanding tax returns? What penalties are due for late payment? Special rules for Covid-19 delays.

Accounts: Tax health check (self-employed)
This is a checklist that will provide you with a lot of pointers to key areas of discussion with sole trader clients.

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