June 2013 question 2 Greenzone Ltd

This topic has 8 replies, 3 voices, and was last updated 6 years ago by jingdong.

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February 29, 2016 at 2:03 pm #302622
jingdong
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Dear Tutor, i have another question needed to be sorted out.
Motor car [3] 8 March 2013 9,100 8,500
Motor car [4] 8 March 2013 12,400 18,900
when calculating capital allownace, disposal main pool car (3) by using original cost (8,500) while dispasal special pool by using proceeds value (12,400), would you please tell me why?
many thanks
March 1, 2016 at 12:34 pm #302815
boma77
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If an item is sold then you should deduct the lower of sale proceeds and original cost.
March 1, 2016 at 3:54 pm #302848
jingdong
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thanks a lot
March 1, 2016 at 4:07 pm #302853
jingdong
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Hello Boma77, there is another question shown as follows:
Trancis is a sole trader who has been in business for many years preparing accounts to 5 April each year. His recent results have been as follows:
y/e 5 April 2014 Profit ……………………16000
y/e 5 April 2015 Loss……………………..(25000)
Francis has gross invetment income of £3000 each year. He is expected to make trading profits of around £12,000 per annum over the next few years.
What is the trading loss to carry forward to the tax year 2015/2016 if Francis makes the most advantageous claim for loss relief?
the answer is 6000, would you please help me?
many thanks

.
March 1, 2016 at 5:21 pm #302881
boma77
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the investment income (3.000) for the tax year 2014/15 is covered by the personal allowance.
The maximum carry back is 19.000 (16.000 + 3.000) against total income.
Therefore trading loss carry forward is 6.000 (25.000-19.000).

I hope this is correct.
March 1, 2016 at 5:35 pm #302885
Tax Tutor
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Again jingdong some of your questions indicate you have not properly studied the basic points within the OT Course Notes and lectures – use the lower of sale proceeds or original cost in dealing with disposals in a CA computation!
In respect of the losses question the answer is based on making a claim against the total income of the tax year preceding the year of loss – 2013/14 where there is a total income of 19,000 (16,000 + 3,000) and making no claim against the total income of 2014/15 (the tax year of loss) as clearly this is already covered by the PA. This will leave 6,000 (25,000 – 19,000) to c/f.
In making the claim of 19,000 in 2013/14 it will waste the personal allowance of the year but if the whole loss was instead c/f against future trading profits then even more PA would be lost.
March 1, 2016 at 6:27 pm #302906
jingdong
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thank you for your answering, but i am still confused PA is 10,000, and i checked note , no one is mentioning PA in chapter 18.
many thanks
March 2, 2016 at 12:37 pm #303008
Tax Tutor
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If you are referring to Chapter 18 in the OT Course notes then that is Corporation Tax losses where of course there is no mention of the PA!! Your question is about income tax losses which is Chapter 7!
March 3, 2016 at 10:46 am #303228
jingdong
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thanks a lot , i had noticed that , thank you again for your patient
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