Cheque still not cashed 3 months on...

[Mully79]

I gave a cheque to my daughter's nursery for £253 on 22nd December from my business account. This amount relates to fundraising profits that I raised to buy new equipment for the nursery, not our usual nursery fees. Despite repeated requests, they have still not cashed this cheque.

So now we're nearly at the end of the tax year, if the cheque isn't cleared until after 1st April does that mean I have to put it against next year's tax return and not this one even though in my books I've written down when this cheque was issued and a receipt from then was given? And how long can they keep hold of the cheque before it becomes invalid or the bank start querying the delay in cashing it in - I just want the money out of my account and done with. You'd think they'd want the money, but I guess not!

[ummmm]

It goes on the date the cheque was written I believe.

[Skyline D]

So many points:

1 - No, the relevant date is the date the cheque was written. When they cash it is not your problem, though if they were later to write it off and not take it then you'd have to account for it again as income at that point.

2 - Legally a cheque is valid for four years I believe under the Cheque Act. However most banks will not honour one more than six months old if they actually notice the date at all. Or some will query with you whether it is ok to cash after six months. Depends on your bank's policy and also that of the paying in bank.

3 - The "tax year" for individuals and non-corporate businesses is 5th April, not 1st. If it's a company then it is the company year (which may well be March 31st of course).

4 - Not quite clear on why money for fund-rasing equipment was in your business bank account in the first place? I presume the business is not one that fund-raises for charity? Possibly money collected at a business address though?

5 - If this money represents money collected from others, banked in your bank account and then you wrote a cheque for the total to give in one then it should have absolutely no relevance to your tax return. It is not and never was your money. The income shouldn't be in your tax return and the expense shouldn't either.

6 - If this was in fact just a donation from your business in effect then it's not deductible from your taxable profits either unless the nursery is a registered charity (which is unlikely but not impossible). In which case it also has no relevance to your tax return.

[Mully79]

Thankyou for both your replies. When did the ratings thing disappear on AB, sorry I can't rate both answers!

Sky - sorry 5th April, not thinking straight here at the mo. I have requested again that they cash the cheque, I don't see why they are taking so long unless they have lost it.

You've just brought something up now which has thrown me a bit regarding what to declare on the tax return -

Basically I sell personalised goods through this nursery, the profits of which I give to them. Originally I was going to take a cut myself and they would receive a percentage commission payment, but I later decided to just give them the whole monetary profit. I am self-employed - I collect their payments, deduct material costs and give them a payment through my business account. It is also a means to market my product locally, and from this I do generate other orders which are dealt with completely separately. But the only grey area here is, I do usually end up with surplus stock bought from the payments as I have to order some of my materials (for this particular fundraising venture) in bulk. So technically I do profit as I have gained stock - so wouldn't that mean I'd have to declare it regardless of the costs cancelling themselves out and technically being a fundraiser?

I'm confusing myself now...

[ABerrant]

A slight amendment to Skyline D's 2nd point:

The Cheques Acts of 1957 and 1992 (amendments to the Bills of Exchange Act 1882) make no reference to any period of validity. The BoE Act itself only suggests that presentment of a cheque be "within a reasonable time of its issue"; "reasonable" being determined, in part, by trade and banking practice. Hence, the banks tend to return cheques in excess of 6 months as "out of time".

However, the Limitation Act 1980 allows a period of 6 years for enforcement of the debt for which the cheque was originally drawn, thus the cheque amount may be deemed to be legally "valid" for 6 years with the proviso that after 6 months the cheque itself times-out and another cheque for that amount should be requested.

[Skyline D]

I've no idea why my first answer refers to cheques as being valid for four years when I re-read it. I'm sure I typed six years. I was well aware it was six years anyway. Brainfade!

[Skyline D]

As for the follow up question. I'd tend to leave all dealings with the nursery off the tax return to be honest. Unless the stock "gain" is something more than trivial no-one will care. It's effectively voluntary labour for the nursery who make all the profit. I doubt the Revenue would pursue you for anything if you ignored it, especially as the sales are through the nursery.

[Mully79]

Thanks AB and Sky, I'll panic no more and take your good advice :)

[boxtops]

I believe an ordinary cheque expires 6 months from the date of issue, unless it's soemthing like a provident cheque which has a longer term. If you Google "cheque validity period", quite a lot of information comes up.