Key Takeaways
- A wrong accounting date can move profits into the wrong basis period, causing double taxation, lost overlap relief or an incorrect 2023/24 transition calculation.
- HMRC treats the 2023/24 return as the final opportunity to claim overlap relief. Under the tax-year basis, overlap relief cannot be deducted and unused relief is lost.
- Obtain HMRC’s overlap figure, check your own records and compare both with your returns, accounts and your accountant’s tax computations.
- A return can be amended within 12 months of the filing date. After that, overpayment relief may be available within four years of the end of the relevant tax year.
- Correct the HMRC position first, then preserve engagement letters, returns and correspondence so any loss caused by your accountant can be quantified.
- Our solicitors can assess whether a breach of duty caused a quantifiable loss, including unnecessary tax, interest, penalties or lost relief.
- Go Legal is rated Excellent with over 300 five-star reviews and 5/5 on Trustpilot and Google, placing our solicitors among the best-reviewed litigation lawyers in England and Wales.
Can You Claim Overlap Relief If Your Accountant Used the Wrong Accounting Date?
A wrong accounting date on a Self Assessment return can cause profits to be taxed twice, or overlap relief to be omitted, understated or claimed in the wrong year. Since basis-period reform, the consequences are harder to reverse. HMRC treats the 2023/24 return as the final opportunity to claim unused overlap relief, so relief your accountant missed may now be recoverable only through a late claim to HMRC or a professional negligence claim against the accountant.
Dealing with an accountant’s wrong accounting date involves two separate exercises. The first is correcting your tax position with HMRC. The second is deciding whether the accountant should compensate you for any loss that cannot be corrected.
Our London-based solicitors can assess whether the error caused quantifiable loss, including unnecessary tax, interest, penalties or lost relief.
Accountant Wrong Accounting Date Overlap Relief: What Does It Mean?
An accountant has used the wrong accounting date when the accounts and the Self Assessment return show different accounting periods, or when the period reported to HMRC has the wrong start date, end date or length.
This mattered because, under the former basis-period rules, the accounting date decided which profits were taxed in a particular year. Section 198 of the Income Tax (Trading and Other Income) Act 2005 set the general rule: the basis period for a tax year was the 12 months ending with the accounting date in that tax year.
A wrong date could therefore move profits into the wrong year, distort overlap profits and overlap relief, and carry the error into the 2023/24 transition calculation.
Common warning signs include:
- A 12-month accounting period was treated as ending on the wrong day.
- The accounts and tax returns show different accounting dates, sometimes for several years running.
- A change of accounting date appears in the accounts but not in the tax computations.
- A change of accounting date was not notified to HMRC by the relevant 31 January deadline.
- Overlap profits were omitted, understated or claimed in the wrong tax year.
- The 2023/24 transition calculation used figures from the wrong accounting period.
Historically, a change of accounting date also had to satisfy statutory conditions. The first accounting period ending on the new date generally could not exceed 18 months, and notice had to be given by the relevant deadline. An accountant who changed the date in the accounts without meeting those conditions could leave the tax position out of step with the business’s real trading periods.
How Did Basis-Period Reform Change Overlap Relief for Sole Traders and Partnerships?
Basis-period reform replaced the old current-year basis with the tax-year basis from 2024/25. The 2023/24 tax year was the transition year, in which every business’s basis period was aligned with the tax year and outstanding overlap relief was made available.
Under HMRC’s basis period reform guidance, profits are now taxed in the tax year in which they arise. The tax year runs from 6 April to the following 5 April, regardless of the accounting date. The reform also stops any new overlap relief from being created.
| Tax period | Basis for taxing trading profits | Overlap relief position |
|---|---|---|
| Before 2023/24 | 12 months ending with the accounting date in the tax year | Overlap profits could arise and relief had to be tracked |
| 2023/24 transition year | Basis period aligned to the tax year | Outstanding overlap relief made available against transitional profits |
| From 2024/25 | Profits arising in the tax year | Overlap relief cannot be deducted; unused relief is lost |
HMRC’s transitional rules guidance at BIM81270 confirms that relief available in 2023/24 included relief that should have been deducted after an earlier change of accounting date but was not. That matters if your accountant mishandled a change of date years ago: the transition year was the chance to put it right.
The reform did not correct historic errors. A wrong date used before the transition may still be reflected in HMRC’s records and in the 2023/24 figures.
What Is Overlap Relief and How Can a Wrong Accounting Date Cause Double Taxation?
Overlap relief is relief for profits taxed twice under the former basis-period rules. HMRC calls those profits overlap profits.
HMRC’s BIM81075 explains that an overlap period falls within two basis periods. The relief exists so that the total profits charged to Income Tax match the profits made during the life of the business. Overlap normally arose when a business started trading or changed its accounting date, and relief was given on cessation, after a change of accounting date or under the 2023/24 transitional rules.
Where relief was available, it was not optional. HMRC’s BIM81085 treats overlap relief as a mandatory deduction, and the full amount available for the tax year must be deducted. An accountant who left it out was not exercising a choice.
A wrong date can cause several problems:
- HMRC’s overlap figure may be wrong because historic returns used the wrong periods.
- HMRC may hold the correct figure, but the accountant may never have claimed it.
- Relief may have been deducted in the wrong year, or omitted from the 2023/24 transition calculation.
- Profits may have been taxed twice with no corresponding deduction.
How Do You Check HMRC’s Overlap Relief Figure and Find an Accounting-Date Error?
Start by obtaining HMRC’s overlap relief figure, then compare it with every relevant return, set of accounts and tax computation. HMRC calculates overlap relief from its records, so you should request its figure rather than rely only on a calculation from the accounts.
HMRC provides an official service to get your overlap relief figure. It can take several weeks to receive a response. HMRC has also said in its Agent Update that, after 1 June 2026, anyone needing overlap relief information should first check their own records, including previous tax returns and calculations. Your historic paperwork is therefore essential.
What Documents Should You Compare With HMRC’s Records?
Gather:
- Self Assessment returns from the opening years of the trade.
- Accounts and tax computations for each affected period.
- Any change-of-date notifications or elections.
- HMRC correspondence, assessments and any overlap statement.
- The accountant’s engagement letter and your instructions.
- Tax software exports, working papers and draft returns where available.
Compare the accounting period shown in the accounts, the tax computation, the submitted return and HMRC’s figure. A discrepancy in one early return can flow through every later year.
If HMRC’s figure conflicts with your documents or is unavailable, the position may need to be reconstructed from the original basis periods, opening-year profits and any change-of-date notifications. Then check whether overlap relief was deducted in the 2023/24 transition calculation, and in full.
Can You Correct a Wrong Accounting Date on a Self Assessment Return?
Yes, but the route depends on the tax year affected and how much time has passed.
Section 9ZA of the Taxes Management Act 1970 allows a taxpayer to amend a Self Assessment return, but not more than 12 months after the filing date. For most returns, the filing date is 31 January following the end of the tax year.
Once that window has closed, HMRC’s Self Assessment Manual confirms that you may still be able to claim overpayment relief under the Taxes Management Act 1970. The time limit is four years from the end of the relevant tax year, not from when you discovered the error. If the amendment window for a 2023/24 return has closed, overpayment relief is likely to be the remaining route to recover overlap relief that was wrongly omitted. These claims are subject to statutory conditions, so they should be prepared carefully with full supporting calculations.
How Do You Amend a Return or Make a Later Claim?
- Identify every return affected by the wrong accounting period.
- Recalculate the net tax position across all affected years.
- Check, year by year, whether the 12-month amendment window or the four-year overpayment relief period is still open.
- Submit the amendment or claim with supporting calculations and documents.
- Keep records of HMRC’s response, any repayment, interest, penalties or refusal.
Correcting one year may increase tax in another, so the calculation must cover the overall position rather than only the year that appears overpaid. Late-payment interest and penalties may also need review where the accountant caused the error and you took reasonable care, although the outcome depends on the facts and the relevant penalty or interest rules.
A tax correction is separate from a compensation claim. HMRC decides the correct tax liability. A civil claim against the accountant asks whether their work caused a loss that would otherwise have been avoided.
When Can You Claim Compensation From an Accountant for Lost Overlap Relief?
You may have a professional negligence claim if the accountant owed you a duty of care, breached that duty and caused you quantifiable loss. An accountant must use reasonable skill and care, and using the wrong accounting date may be a breach if a reasonably competent accountant would not have made the error.
The relevant questions usually include:
- Did the engagement cover tax returns, accounting dates and basis-period advice?
- Would a reasonably competent accountant have used the correct accounting date?
- Did the error cause the loss?
- What loss remains after correcting the HMRC position?
The engagement letter often defines the scope of the accountant’s duty. It may show whether they were retained only to prepare accounts, or also to file returns, advise on accounting-date changes or manage the move to the tax-year basis.
Potential losses may include tax paid twice, overlap relief permanently lost, HMRC interest and penalties, and the reasonable professional fees incurred to reconstruct and correct the position. Expert evidence on what a competent accountant should have done is often needed.
The limitation period for a professional negligence claim is generally six years, although a three-year period running from the date of knowledge may apply in some circumstances. The rules are complex, so do not wait for HMRC to finish before taking advice on limitation.
Red flags include:
- No overlap relief calculation or tracking record.
- A failure to notify HMRC of a change of accounting date.
- The same wrong date used year after year.
- HMRC queries about basis periods left unanswered.
Our solicitors advise on professional negligence claims against accountants, including tax errors and lost relief.
What Should Sole Traders, Partnerships and Businesses Do After an Accounting-Date Error?
Secure the records, establish the true tax position and do not accept an unsupported explanation from the accountant.
How Do Incorporation, Cessation and Partnership Changes Affect Overlap Relief?
If a trade ceased before the tax-year basis took effect, available overlap relief should have been deducted from the final period’s profits. Where a sole trade incorporated, the final trading period before incorporation may have needed to be treated as a cessation for overlap-relief purposes. If either happened, check the final return as carefully as the 2023/24 return.
A partnership error can affect the partnership return and each partner’s personal return. Partners who joined or left at different times may not suffer the same loss, so each person’s overlap relief and tax position must be calculated separately, and each partner’s return may need amending.
LLPs are generally taxed as partnerships for income tax purposes, so the same historic overlap issues may arise. If the error affected a partnership or LLP, a negligence claim may be brought by the partnership, individual partners or both, depending on who suffered the loss.
What Are the Immediate Steps if Your Accountant Used the Wrong Accounting Date?
- Request HMRC’s overlap relief figure and keep the response.
- Gather historic returns, accounts, computations and correspondence.
- Compare the dates and periods in every document.
- Identify every affected tax year and calculate the net tax effect.
- Amend returns or make the appropriate claim to HMRC while the time limits allow.
- Notify the accountant in writing of the suspected error and the loss.
- Ask the accountant to notify their professional indemnity insurer where appropriate.
- Take legal advice if the accountant disputes responsibility or does not respond.
Frequently Asked Questions
Get Expert Help With Wrong Accounting Dates and Overlap Relief
If your accountant used the wrong accounting date, you may have paid tax twice, lost overlap relief or submitted incorrect figures during basis-period reform. With the 2023/24 return treated as the final opportunity to claim overlap relief, and the amendment and four-year overpayment relief windows closing year by year, every month of delay can turn a recoverable tax overpayment into a permanent loss. The negligence limitation period runs alongside those deadlines.
Our solicitors advise individuals, partnerships and businesses across England and Wales on accountant negligence, tax errors and related commercial disputes. We can review the evidence, work out what can still be recovered from HMRC, calculate the remaining loss and pursue the accountant where the facts support a claim.
