This might hurt ...

STEVE BURRELL considers some financial year-end planning issues for medical practitioners.

PRIOR TO THE introduction of the current year basis of assessment substantial tax advantages could be gained by selecting an appropriate year end particularly involving commencements and cessations. A financial year ending towards the start of the tax year would give substantial cash flow advantages where profits were rising and it was possible for some profits to escape assessment. These same advantages are no longer present with current year accounting and in the case of medical practitioners the choice of a year end other than 31 March could store up substantial problems in the future despite the initial cash flow advantages shown by Example 1.
Unlike the previous pre-self assessment régime profits have not disappeared but have been stored up for the future. In Example 1 below profits have been deferred and the...