ExpertMedium2 marksMultiple Choice
ACCA · Question 21 · Income tax and NIC liabilities
Section B - Case 2 (GreenRoots LLP)
GreenRoots LLP, an environmental NGO consultancy, has been trading for many years, making accounts up to 30 September. In 2023/24, they decide to change their accounting date to 31 December. They prepare accounts for the 15 months from 1 October 2022 to 31 December 2023.
What is the basis period for the tax year 2023/24?
Section B - Case 2 (GreenRoots LLP)
GreenRoots LLP, an environmental NGO consultancy, has been trading for many years, making accounts up to 30 September. In 2023/24, they decide to change their accounting date to 31 December. They prepare accounts for the 15 months from 1 October 2022 to 31 December 2023.
What is the basis period for the tax year 2023/24?
Answer options:
A.
1 October 2022 to 30 September 2023 (12 months)
B.
1 January 2023 to 31 December 2023 (12 months)
C.
1 October 2022 to 31 December 2023 (15 months)
D.
6 April 2023 to 5 April 2024 (12 months)
How to approach this question
Identify the end of the previous basis period (30 Sept 2022). The new basis period starts the next day (1 Oct 2022) and runs to the new accounting date in the 23/24 tax year (31 Dec 2023).
Full Answer
C.1 October 2022 to 31 December 2023 (15 months)✓ Correct
When a business changes its accounting date, the basis period for the year of change ends on the new accounting date (31 December 2023). It begins immediately after the end of the basis period for the previous tax year. The 2022/23 basis period ended on 30 September 2022. Therefore, the 2023/24 basis period is the 15 months from 1 October 2022 to 31 December 2023. (Note: Overlap profits would be deducted to prevent double taxation).
Common mistakes
Assuming basis periods must always be exactly 12 months, even during a change of accounting date.
Practice the full ACCA TX — Taxation Practice Exam 2
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