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Pls what is the difference between Adjusted Trading Profit and Tax Adjusted Trading Profit. These 2 seem to be used interchangeably. In Chapter 4 (example 1 pg 27) we arrived at the Tax Adjusted Trading Profit by deducting Capital Allowance from Adjusted Trading Profit. However, in chapter 6 (example 6 pg. 45 under Cash Basis for Small Business), we are requested to calculate Adjusted Trading Profit. We also deducted Capital allowance. Pls clarify.
The 2 terms may indeed be used interchangeably but sometimes questions refer to the adjusted trading profit before capital allowances though we would always take the tax adjusted trading profit as being after the deduction of capital allowances.
In corporation tax when dealing with a long period of account we must firstly compute an adjusted trading profit (before capital allowances) and time apportion between the 2 chargeable accounting periods. We then do separate capital allowance computations for each chargeable accounting period and deduct from the adjusted trading profit figure for each period to derive what we may then label as the tax adjusted trading profit figures.
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