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Profit and Corporation Tax on the invoice basis

5 steps

Your profit and your Corporation Tax estimate count a sales invoice as income on the day it is issued, and a credit note on its own date, whatever your VAT method. This is how company profit is worked out. Your VAT return follows its own method.

Profit and loss with a receipt that may be counted twice at 1280

  1. Open Reports, then Profit and loss, choose a Period and press Apply. Invoices appear as one line, Invoiced sales.
  2. A sales receipt that no invoice claims counts as well, on the day it reached your bank, in its own category line. Money allocated to an invoice is not counted again.
  3. If such a receipt exists while you still have an open invoice, a sentence under Expenses warns that it may be counted twice in Trading income, with the count and the total, for example "1 sales receipt of £2,400.00 isn't allocated to an invoice, and you have an invoice still open, so it may be counted twice in Trading income. Allocate it from its bank line."
  4. Press Open the receipt to allocate it (or Open the first receipt to allocate it when there are several), then press Allocate on the invoice it paid.
  5. Under the Corporation Tax line, read the range: "If those receipts are already in your invoices, Corporation Tax is £10,861.99. If not, it is £11,497.99." The app cannot tell which is true, so it shows both until you allocate.

Cases

  • The receipts keep counting in the income figure. The warning flags them and the range bounds the tax; neither changes the profit.
  • A receipt with no invoice behind it is real income, so it stays counted.
  • Refunds, interest and other non-trading income, fully allocated lines, and credit notes never trigger the warning.
  • Under a cash VAT method, "VAT due" follows the payments you filed on, so a payment that crosses the period boundary sits in a different period from its invoice. The statement says so under that line.
  • Corporation Tax is an estimate, before your accountant's adjustments.

Good practice

  • Allocate each payment to its invoice from the bank line, so the warning clears and the estimate is a single figure.
  • Give your accountant the estimate only as a guide. The filed figures come from your returns.