assessment of period and capital allowances

Bban12313y ago

Hi, in the BPP book, there is an example for sole trader and short period calculation for WDA/AIA O. commenced trading on 01/06/2012 made up first account 31/12/2013 and invested into capital assets, I answered the question splitting up the period as it was set out in the assessment chapter like this: year one 01/06/2012 - 05/04/2013 WDA/AIA apportionment = 10/12 year two 01/01/2013 - 31/12/2013 WDA/AIA apportionment =12/12 is the WDA/AIA calculation independent of the assessible periods? the book calculated the WDA/AIA apportionment as 18/12, so he has one allowance figure, but where does that go into? year 1 or year 2? Thanks

TTTax Tutor13y ago#1

The adjustment of profits and the capital allowances computation are prepared for the traders accounting period. We then deduct the capital allowances from the adjusted profit and this tax adjusted trading profit is then used to determine the assessment for the relevant tax years using the relevant bases of assessment. We do not prepare CA comps for tax years we prepare them for the accounting period of the trader!