Taking booking deposits query

[condor]

Hi - wonder if anyone can help.
I don't usually take booking deposits far in advance - if I do start taking booking deposits for summer/winter 2017 holidays will they count as income for this tax year ( up to 5 April 2017) - even though the money is for later in the year?

[KevinCamaroSS]

Do you do your books on a cash basis or an accrual basis?

[condor]

Fairly certain it's cash basis - it's the simple paper self-assessment form I fill in.

[KevinCamaroSS]

Cash basis means you record the cash income as you receive it, similarly expenses when you pay them. Accruals (the normal way) is to record the expense and income as and when it falls due. So, a cash receipt for a rental deposit remains a liability in the books until the rental period. Similarly if you prepay an invoice (e.g. rates) you would apportion it to the relevant periods.

If cash basis then, yes, in the current accounting period.

[condor]

Thanks - the cash basis system sounds a lot easier.
I've taken a retainer/booking deposit for Christmas/New Year 2017 - so can I refund it and reprocess it in the next tax year ie after April 6 2017?

[KevinCamaroSS]

The basis of accounting should be previously agreed with HMRC, you cannot chop and change to suit yourself. What does your accountant say?

[condor]

I haven't got an accountant.
I'm a dog walker/house sitter so we're not talking lots of money
I think in future I'll say no to deposits unless there in the correct tax year.
Thanks for your advice

[Trabi601]

Does it really make a difference? - you have to declare and I'd assume pay tax on it at some point.

[condor]

Trabi601 said:

Does it really make a difference? - you have to declare and I'd assume pay tax on it at some point.

Not really - I wanted to know what would happen if I started taking deposits as a regular practice. Up to now, my regular clients check I'm available for their holiday dates before booking their holiday...or, if they've booked the holiday have to find alternative pet care arrangements if I'm not available. My thinking is having a deposit scheme would give peace of mind to both parties...and if they cancel ( for whatever reason) I won't be missing out that much. It also puts my business on a more professional level.
Currently, I don't have any terms and conditions written up - it's all done on mutual trust.