HMRC is introducing simplified accounting requirements for sole traders under the VAT threshold (£77k) from April 2013.
For sole traders in this situation the reporting requirements are reduced to three lines:
- Total Income
- Less Total Allowable Expenses
- Net Profit
In addition each line is calculated on a cash basis – ie money in and money out, rather than the standard invoice basis that counts income once it has been invoiced (whether or not payment has been received) and purchases once a bill has been received.
For Crunchers clients we will be reviewing the service we currently provide to see if they want to take advantage of this simplification and amend our fees accordingly.
For anyone who is not one of our clients we recommend to raise this with your accountant.