As the end of the financial year approaches, it is important from a tax perspective, to ensure that your debtors balance at 31st March is accurate.
Here is some helpful advice:
- All work done up to 31 March which is capable of being charged must be included as income.
- Holding some of your invoicing over until April does not necessarily mean you can ignore it.
- If you do hold some of your invoicing over until April, you don’t have to actually send out an invoice but you do have to add the amount into your accounts receivable figure for tax purposes. You won’t be taxed twice because once we have put in a figure for the amount owing to you, we then deduct it in the next year’s accounts.
- If work cannot be charged because it is not quite complete, it doesn’t get included in your accounts receivable.
Work in progress, which is partly completed work.
This work must be valued on the basis of the amount of material which has gone into jobs in progress and the value of the wages they have paid to do that work. Any other direct costs should also be included such as hire of equipment.
Don’t deduct money received in April, until you have finalised the total owing to you at the end of March.
Professionals, who have supplied partly completed work (not invoiced), do not need to include these services in their annual accounts unless there is a right to make progress claims.