Business tax TP adjustments....

Lucy_M

Hi,

I am trying to complete a homework question but am stuck as to whether a payment is allowable or not...

It is interest paid, the info states:
Sofa Ltd raised a debenture loan on 1/7/13 and this was used for trading purposes. Interest of £20,800 was paid on 31/12/13 and £10,400 was accrued at 31/3/14.

I know our tutor gave us a tricky homework on purpose but I don't like not getting it right...

Any help greatly appreciated!

Lucy

Lucy_M

Please....

topcat

i want to help but have no idea on this one i am afraid as havent done BTX yet thats next

although it might be worth posting here if your homework is due in soon , your dog wont have to eat it then

https://www.facebook.com/groups/aatdistancelearning/

Lucy_M

Ah, thanks topcat, will try them, am a member but had forgotten!

Clintm15

Hi Lucy,

The interest relates to trading activities so it should be treated as trade expense as part of the calculation of taxable trading profit.

In the example you gave £20,800 had already been paid in the period and £10,400 is still owed. This means that the total allowable to be used as a trade expense is £31,200.

I hope this helps.

Lucy_M

Yay, thank you!! I had a feeling the main interest paid would be allowable but wasn't sure about the accrual.

Very muchly appreciated :thumbup1: