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Dear Tutor
Im having some difficulty in understanding and answering the below questions …
Appreciate you help in this regard …
I am finding it difficult to identify the Chargeable Accounting Period (CAP) for the Following..
Q1. C Ltd commenced trading on 01.01.2012 closes first accounts on 30.09.2012 ?
In this question the Co. hasnt completed a full 12 months of trading … would my answer be correct if I answer it as follows..
01/01/2012 – 05/04/2012 – FY 11/12
01/01/2012 – 30/09/2012 – FY 12/12
Overlap Profits 01/01/2012 – 05/04/2012 ..Appreciate your comments …
Thank you
You are confusing the income tax rules for the bases of assessment for the unincorporated trader (see OT course notes chapter 6) with the preparation of corporation tax computations for limited companies (incorporated businesses) (see OT course notes chapters 15 &16). Please study these chapters!!
Here is the answer to your question you have written in your post, try and draw a timeline, it will really help.
First year of commencement of trade ALWAYS use ACTUAL BASIS (i.e. from date of commencement which in this case is 1st January 2012 to the end of the Tax Year which is in this case 5th April 2012.
First Tax Year (2011/2012) – it will be 3 months divided by 9 months multiplied by the amount of profit made in that period. This amount will be the trade profits assessed for the tax year 2011/2012.
I’ve used 3 months because there are 3 months from the date of commencement which is January till the end of the tax year April (ignore the first week for April). I’ve used 9 months as that’s how long the accounting period is (1st Jan 2012 – 30th Sept 2012)
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