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Posted Mon, 21 Nov 2022 23:37:09 GMT by Ben S
I started my business as self-employed mid of Aug, 2021 for 1 year as a consultant for an offshore company. I become a UK tax resident in July 2021. My business was only last for 1 year and was terminated mid of Aug 2022. I received a 1-time payment for my services from this offshore company in August 2022 meaning that payment for the 1 year service was made at the end of service (Aug 2022) and there was no payment on between. I registered as self employed for the year 2021/2022. According to HMRC website, small business with less than GBP150k turnover can use Cash basis accounting. I am not sure if I can use cash basis accounting as there is no business turnover for consulting business? If yes, Should I report this 1-time payment received in the tax year 2022/2023 instead of 2021/2022 as the payment was received in Aug 2022?
Posted Wed, 23 Nov 2022 15:38:18 GMT by HMRC Admin 17

If you choose to use the cash basis, you would declare the payment in the 2022 to 2023 tax year, as cash basis works
on the principle of the dates of cash in and cash out. 

Standard accounting practice would have you declare the payment in the tax year the invoice was issued.

Thank you.

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