Question 55- Crash Bash LTD – calculation of tax liability

This topic has 4 replies, 3 voices, and was last updated 11 years ago by Tax Tutor.

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October 25, 2014 at 6:25 pm #205955
mini
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Crash Bash LTD commenced trading on 1 February 2013
Crash Bash LTD prepared its first accounts for the nine-month period ended 31 October 2013

TTP = 338,510
FII = 40,000
Augmented profit = 378,510

Question: Calculate corporation tax liability for the nine-month period ended 31 October 2013?

According to the solution, the upper and lower limits are adjusted as following:
Upper limit 1,500,000 * 9/12 *1/2 = 562,500
Lower limit 300,000 * 9/12 *1/2 = 112,500

Could you please explain to me why the upper and lower limits are multiplied by ½?
October 25, 2014 at 8:39 pm #205969
haymd1
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Because there would must be an associate company so the limits will be reduced read the question again
October 25, 2014 at 10:56 pm #205978
mini
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Thank you so much for your explanation. It all makes sense now.
October 26, 2014 at 7:30 am #205998
haymd1
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You are most welcome 🙂
October 26, 2014 at 9:48 am #206056
Tax Tutor
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Correct – there must indeed be an associated company and hence divide the limits by 2.
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