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Nikitagarwal
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Hi Sir,
Hope you are doing well!
Please refer to OT question no, 78 where they have asked for Ae’s trading income assessment ?yMy question is why have they included 2 months from 1st may 19 to 30th june 19 , isnt the tax period ended 30th April 19?
and since they are asking for 19/20 assessment i bekieve it means 6th april 19 to 5th april 2020 and therefore we need to further calculate it for a year , please correct if I am wrong.
Thanks!
Tax Tutor
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Sorry but you will need to give me all the information in the question and identify the issue in the answer that you don’t understand – can I also check that you have worked through the lectures and study notes on this subject before attempting the question?
Nikitagarwal
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Ques – Ae and Bee commenced in partnership on 1 July 2018 preparing accounts to 30 April. Cae joined as a partner on 1 July 2020. Profits were always shared equally. The partnership’s trading profits since the commencement of trading have been as follows:
£
Period ended 30 April 2019 54,000
Year ended 30 April 2020 66,000
Year ended 30 April 2021 87,000Ques – What is Ae’s trading income assessment for the tax year 2019/20?
Answer 2019/20
Second year, short period of account (first 12 months trading)
1 July 2018 to 30 April 2019
£54,000 ? ½ 27,000
1 May 2019 to 30 June 2019
£66,000 ? ½ × 2/12 5,500My question here is : Isnt the tax period ended 5th April 2019 then why have they included this 2 months i.e, May and June 2019 also ?
And yes sir I have worked my way through your lectures first
Tax Tutor
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The basis period for 2019/20 is correctly stated as – the first 12 months of trading – this is the period from 1 July 2018 to 30 June 2019.
This covers all of the opening 10 month period to 30 April 2019 PLUS 2 months of the accounting year ended 30 April 2020 – as the answer has correctly shown.
The bases of assessment are clearly shown in Chapter 6 and their application to partnerships in Chapter 8.
This query and your previous one suggest that maybe you have not properly understood how to apply the relevant bases of assessment to identify the correct basis periods in each tax year
Nikitagarwal
Tax Tutor
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