Business Tax - Osborn workbook , practice exam 2 - task 8

ReelSpike

I have my Business Tax exam tomorrow (2013 qualification)

In the Osborn workbook, practice exam 2, task 8 - I'm a little confused as to how they calculated the figures on the tax return:

Below is the question

Fizz Ltd has the following information for the year ended 31/12/13:

Taxable total profits 1,635,000
Dividends Rec'd 27,000
Fizz Ltd has no associated companies

Complete the relevant boxes on the following return for Fizz Ltd, ignore any pence: the figures in the boxes below are my answers


37: Profits chargeable to corporation tax
1,635,000


38: Franked Investment
30,000


39: Number of Associated companies in this period
0


40: Associated companies in the first financial year
BLANK


41: Associated companies in the second financial year
BLANK


42: Put an X in this box if you are claiming marg relief etc
BLANK


43: Financial year
2013


44: Amount of profit
1,635,000


45: Rate of Tax
23%


46/63: Tax /corp tax
376,050




Here is the answer in the back of the book:

37: Profits chargeable to corporation tax
1,635,000


38: Franked Investment
30,000


39: Number of Associated companies in this period
0


40: Associated companies in the first financial year
BLANK


41: Associated companies in the second financial year
BLANK


42: Put an X in this box if you are claiming marg relief etc
BLANK


43: Financial year
2012


44: Amount of profit
408,750


45: Rate of Tax
24%


46: Tax
98,100


53: Financial Year
2013


54: Amount of Profit
1,226,250


55: Rate of Tax
23%


56: Tax
282,037


63: Corp Tax
380,137




Am I missing something? Nothing in the original question states anything about having 2 years (2012 and 2013)?

During my studies in Level 4, I have come across a number of errors both in the Osborn books and on the AAT study material - it does confuse me when I don't understand what they've done!

MarieNoelle

The main rate dropped by 1% on 1st April 2013 so you need to split the profit by financial year:
01/01/12 - 31/3/12 £1,635,000 x 3/12 = 408,750 @ 24%
01/04/13 - 31/12/13 £1,635,000 x 9/12 = 1,226,250 @ 23%