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Hi,
pls, explain me where are the interest payable from note 9. They was for trading acticities and were paid during the FY 2012. I really don’t understand the explanation: ” is deductible in calculating trading loss on an accruals basis”, as long as wasn’t deductuble. Or it’s forgotten here … please, someone to open my eyes! Now, i’m quite confused.
Thank you very much.
Hi, I do not have a copy of the BPP revision kit but I do know the question to which you refer.
Interest is deductible in corporation tax on an accruals basis ie interest payable NOT paid ( a cash basis) in the Chargeable Accounting Period. Interest payable on a trading loan such as in this question is then an allowable deduction against trading profits.
If the loan had been for a non trading purpose, for example to buy a property that is then rented out, then the interest payable is NOT allowable against trading profits but is instead deducted from the interest income assessment of the company. I do not know why the BPP answer would refer to a trading loss as my memory of the question was that a trading profit arose!
Hope this helps remove at least some of the confusion!
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