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“Wilma starts to trade on 1 October 2016.She made taxable profits of 9000 GBP for the first 9 months to 30 June 2017 and 30000 GBP for the year to 30 June 2018.
Year is 2017/2018,Basis period is 1/10/16-30/9/17,9000+30000*3/12=16500.”
The above extract is taken from BPP study text.Can you please explain how he arrived at that figure of 16500?Firstly have you worked through the OT notes and lectures? If so you should then be able to answer this question.
2017/18 is the second tax year
Question – is there an accounting period that ends in that second tax year
Answer – Yes – the accounting period ending 30 June 2017. As this period is less than 12 months (it’s a 9 month period) the basis of assessment becomes the profits of the first 12 months of trading – this will be all of the opening 9 month period plus 3 months of the second accounting period as shown in the answer above.
This will also create an overlap profit
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