a btc q - need quick explanation regarding the overlap profit dates in this example!

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lisnic
lisnic Registered Posts: 141 Dedicated contributor 🦉
The activity is:

Harriet starts trading on 1 Mar 07 and has the following results:

Period Profit

1.3.07-30.6.08 32,000
1.7.08-30.6.09 36,800

Show taxable profits for the first 4 tax years and any overlap profits that arise.


Solution is:

Yr Period Workings Taxable Profits
06/07 1.3.07-5.4.07 32,000 x 1/16 2000
07/08 6.4.07-5.4.08 32,000 x 12/16 24000
08/09 31.5.07-30.6.08 32,000 x 12/16 24000
09/10 1.7.08-30.6.09 36800

Ok i got all that bit which was great but then i went to work out overlap profits

The solution has overlap profits as

1.7.07 - 5.4.08 32,000 x 9/16 18000

I had 31.5.07 - 5.4.08 however

Please can someone explain why it is the 1.7.07 and not 31.5.07 as when i look at dates the only dates i can see to be overlapping are the 31.5.07 (in 07/08 and 08/09) up to 5.4.08 (again in 07/08 and 08/09)

Thanks

Comments

  • GemmaLouise
    GemmaLouise Registered Posts: 56 Regular contributor ⭐
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    Hi

    Your overlap occurs in the financial year 07/08 & 08/09

    Your 07/08, 06/04/07-05/04/08 (12/16 x 32000) = 24000

    Your 08/09, 01/07/07 - 30/06/08



    The 01/07/07 is four months into the 07/08 period.

    Your 08/09 finishes on the 30/06/08 - 3 months after the 07/08 period finishes.

    Therefore your overlap profit is

    01/07/07 - 05/04/08 = 9/16 x 32000 = 18000


    Hope this helps - its quite tricky to explain!!!

    Gemma
  • lisnic
    lisnic Registered Posts: 141 Dedicated contributor 🦉
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    no still dont get it sorry

    i understand that those are the 2 years that the overlaps are in but still cant see why its july and not the date i put?

    The bpp text has about 3 lines describing what it is and its not very clear
  • lisnic
    lisnic Registered Posts: 141 Dedicated contributor 🦉
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    anyone else help with this as still dont get it ?! sorry
  • GemmaLouise
    GemmaLouise Registered Posts: 56 Regular contributor ⭐
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    If you write out your 07/08 months:

    April May June July August September October November December January February March




    08/09 :- July Aug Sept Oct Nov Dec Jan Feb March April May June July


    Your o8/09 starts at July which is in the 07/08 year, your last month in the 07/08 year is March, 08/09 carries on to July.

    So the overlap is from July - March?!

    Hope this helps - finding it difficult to explain!!!

    Gemma
  • lisnic
    lisnic Registered Posts: 141 Dedicated contributor 🦉
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    thanks ill look at this again in the morning

    im prob just having a brain dead moment thanks!

    xx
  • GemmaLouise
    GemmaLouise Registered Posts: 56 Regular contributor ⭐
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    we all have them!!

    infact im having one right now - but best to have them now and not in the exam eh!!!!


    xxx
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