Business tax TP adjustments....
Lucy_M
Registered Posts: 136 Beyond epic contributor 🧙♂️
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
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
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Comments
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Please....
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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/0 -
Ah, thanks topcat, will try them, am a member but had forgotten!0
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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.AAT
Level 2 - 2011
Level 3 - 2012
Level 4 - 2013
ACCA
F4 - Corporate Law - Dec 2015 (passed)
F5 - Performance Management - Dec 2014 (passed)
F6 - Taxation - Dec 2013 (passed)
F7 - Financial Reporting - Jun 2014 (passed)
F8 - Audit & Assurance - Dec 2015 (passed)
F9 - Financial Management - Jun 2015 (passed)0 -
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:
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