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Obligations are a set of date periods set by the HMRC, in which a taxpayer has to provide income and expenses data. Each income source will have a set of obligation periods based on its accounting period.
An obligation period will be set to 3 months in length, so for a sole trade with an accounting period of 01/04/17 – 31/03/18, their obligations will be:
01/04/17 – 30/06/17
01/07/17 – 30/09/17
01/10/17 – 31/12/17
01/01/18 – 31/03/18
All obligation must be met in order to complete the individual’s tax final position for the tax year.
It can take up to an hour for the obligation status to be updated.
A period of time within an obligation, for which the tax payer will submit summarised income and expenses information.
An update period can range in length, covering anything from a day to the duration of a whole obligation period. An update period cannot be longer than 3 months, therefore as a minimum, an individual will need to submit 4 updater periods per income source.
Update periods cannot straddle 2 obligation periods.
For example, an individual has a period running the calendar year 01/01/18 – 31/12/18
HMRC set the following obligations:
01/01/18 – 31/03/18
01/04/18 – 30/06/18
01/07/18 – 30/09/18
01/10/18 – 31/12/18
When selecting the frequency of update period, a single update period must not straddle 2 of these obligations.
Therefore setting update periods to the length of 2 months may not be suitable:
01/03/18 – 30/04/18
01/09/18 – 31/10/18
The Update periods highlighted in red would not be acceptable.
This submission is not classed as an update period and does not contribute to the completion of any obligation period. Adjustments and allowances can be submitted at any point within the year.
Each income source will have an adjustments and allowances submission, each containing the adjustments and allowances relating to the corresponding income source.
End of period statement is the process that allows you to finalise the business income for a income source. Each income source requires an EOPS to be submitted in order for that income source to be complete.
For example, if an individual had a self-employment business and a UK property business, 2 EOPS submission would be required.
The EOPS is linked to the accounting period for each source of income and cannot be completed until the end of the accounting period or until all quarterly obligations have been met.
Due date: 31st January Year 2
This process is also referred to as Crystallisation that allows you to finalise a client’s end of year position. This process will include submitting other income and reliefs (Charitable giving, Dividends and Interest) in order to reach the clients final tax liability for a specific tax year.
Once all relevant business and personal data has been submitted to the HMRC, HMRC will return a tax calculation based on all information provided to them throughout the year. Based on this calculation. you will need to ‘Finalise’ this tax
It is not possible to submit a client’s end of year submission until all EOPS submissions have been met (only if a user has any qualifying income sources).
The end of year submission due date: 31st January Year 2
Amended due date: 31st January Year 3 (or 12 months after the submission deadline if later than the 31st).