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Quest1 : Why is it the Trading Profit working 1 had the full 3840 (jan13-april13) and then 8/12 of the 12060 (may13-apr14).
Hi Denielle, you need to study / revise the basis periods for unincorporated traders see chapter 6 page 42 of the OT course notes and note particularly example 2 which illustrates the same scenario of a short accounting period ending in the second tax year of assessment and the use therefore of the first 12 months of profit as the basis of assessment!
here basis period
tax year profit
2012-2013 1st jan2013 -5th april2013 2880 ie3840*3/4months
2013-2014 1 jan2013 -31st dec 2013 11880 (3840+8040)
2014-2015 1st may2013-30th april2014 120601 sep 2013 18000 8% and 30% calculating i get 432 . sir, could you help me to solve this problem i dont know from were to deduct 432 capital allowance and overlapping profit is deducted in final year right i saw example 2 illustrate i understood that, but still this is confusing
Like many students who have not fully studied the notes you do not seem to have understood the process of establishing the assessments in the opening tax years of assessment.
(1) Compute the adjusted trading profits for each accounting period before capital allowances
(2) Compute the capital allowances for each accounting period and deduct from the adjusted trading profit of the accounting period
(3) Apply the relevant bases of assessment for each tax year of assessment and in so doing determine the amount of any overlap profits
Go back to the relevant chapters in the course notes and lectures to confirm you have this knowledge before attempting past exam questions.
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