When the cash basis comes to an end seven years after you started out, you will need to move to the earnings basis. This switch produces a one-off additional profit known as the catch-up charge, which is designed to smooth the transition process.
By preparing accounts on both the cash and earnings basis, we can calculate the difference between the two – the catch-up charge – which can then be added to the profits over a ten year period.
At RDP Newmans, we will advise on how the catch-up charge affects you and ensure your accounts accurately reflect the true figures. We will explain how it works in relation to your total taxable income and deal with any issues that may arise.
For more information on how we can help legal professionals deal with the complexity of the catch-up charge, please contact us.
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