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So I was thinking, how do you treat the Corporate tax liability computation where the period of accounts
1) Gives rise to two FY’s i.e. 1 Jan 14 to 30 Sep 14 Hence FY13 and FY14
2) And based on the above, is a short period as well i.e. a period of 9 months.and finally the Augmented Profit turns out to be marginal after time apportioning the upper and lower limits?
I am very eager to see, most especially how marginal relief will be computed this time (with respect to time apportioning). ThanksYou will not find an example I think in the material of the official providers of the ACCA material and likewise the OT notes, which is pretty indicative of the chances of seeing such a question in the exam and if it did come up as a MCQ it is even less likely that the company would be marginal!
Company prepares accounts for the 10 month period ending 30 September 2014
TTP £1,200,000
FII £ 100,000Answer
Revised lower profit limit = 10/12 x £300,000 = 250,000
Revised upper profit limit = 10/12 x £1,500,000 = 1,250,000Hence augmented profit is £1,300,000 (1,200,000 + 100,000)
Therefore company is large so CT calculated as follows:
FY13 `4/10 x 1,200,000 = 480,000 x 23% =
FY14 6/10 x 1,200,000 = 720,000 x 21% =If no FII then augmented profit would be below upper profit limit so the company would be marginal. This would mean that from each of the 2 figures above you would need to deduct marginal relief.
The marginal relief calculations for each FY would be based on the revised upper profit limit as above and the time apportioned TTP’s as above (which would be the same as the Augmented profit figures for each FY as no FII).
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