Cash Basis for Sole Trader

Discussion in 'Accounts & Finance' started by Hash and Bash, Jun 11, 2015.

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  1. Hash and Bash

    Hash and Bash UKBF Regular Free Member

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    I have been looking at changing from the accrual basis accounting to the cash basis accounting for this year forwards.
    I am a sole trader below the vat threshold.
    I do not have any capital allowances.

    From what I can see, any stock I buy in the current year is accounted for in the current year, even if it remains unsold at year end.

    This is attractive to me as I am introducing new lines and my levels of stock are likely to increase dramatically as I have to take fairly expensive MOQs.

    I can also carry forward any trading losses to the following years.

    Have I got this right?
     
    Posted: Jun 11, 2015 By: Hash and Bash Member since: Nov 8, 2012
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  2. UK Contractor Accountant

    UK Contractor Accountant UKBF Legend Full Member - Verified Business

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  3. Hash and Bash

    Hash and Bash UKBF Regular Free Member

    319 63
    Unfortunately that link goes to a subscription only article.

    I note that the HMRC guide does make a small reference to stock

    "Cash basis probably won’t suit you if you:

    • want to claim interest or bank charges of more than £500 as an expense
    • run a business that’s more complex, eg you have high levels of stock
    • need to get finance for your business - a bank could ask to see accounts drawn up using traditional accounting to see what you owe and are due before agreeing a loan
    • have losses that you want to offset against other taxable income (‘sideways loss relief’) "
    Any idea what HMRC define as high levels of stock?
     
    Posted: Jun 11, 2015 By: Hash and Bash Member since: Nov 8, 2012
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  4. UK Contractor Accountant

    UK Contractor Accountant UKBF Legend Full Member - Verified Business

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    if you google search hmrc cash accounting its on the first page - last on the page I think.

    It should then let you have the whole article if you access it via this route
     
    Posted: Jun 11, 2015 By: UK Contractor Accountant Member since: Sep 18, 2013
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  5. Hash and Bash

    Hash and Bash UKBF Regular Free Member

    319 63
    Thanks - that worked.
     
    Posted: Jun 11, 2015 By: Hash and Bash Member since: Nov 8, 2012
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