Business tax TP adjustments....

Options
Lucy_M
Lucy_M Registered Posts: 136 Beyond epic contributor 🧙‍♂️
in AAT Level 4 (Level 8 in Scotland)
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



Comments

  • Lucy_M
    Lucy_M Registered Posts: 136 Beyond epic contributor 🧙‍♂️
    Options
    Please....
  • topcat
    topcat Registered Posts: 452
    Options
    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
    Lucy_M Registered Posts: 136 Beyond epic contributor 🧙‍♂️
    Options
    Ah, thanks topcat, will try them, am a member but had forgotten!
  • Clintm15
    Clintm15 Registered Posts: 248 Dedicated contributor 🦉
    Options
    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)
  • Lucy_M
    Lucy_M Registered Posts: 136 Beyond epic contributor 🧙‍♂️
    Options
    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:

Categories

Privacy Policy