Basis Periods - Assessment 1 Task 1.1

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RKD_412
RKD_412 Registered Posts: 1
in Business Tax
I need some help understanding this question for BSTX on basis periods.
The question is as follows:

Meredith started trading 1st Feb 2015 making up first set of accounts 15 month period to 30th April 2016.
Adjusted profits were:
PE 30th April 2016 : £94,920
YE 30th April 2017: £61,980

Asked to work out the taxable profits for second and third year including basis periods.
Answers:
2nd Year - 6th Apr 2015 - 5th Apr 2016 = £75,936
3rd Year - 1st May 2016 - 30th Apr 2017 = £75,936

I don't understand why the taxable profits are the same when the basis periods are different?

Help would be much appreciated as I have my exam this weekend!

thanks!

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  • fournaanjez
    fournaanjez Registered Posts: 32
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    TY 2014/15: 1 Feb 2015 - 5 April 2015 = 2/15 x 94920 = 12656

    TY 2015/16: (YEAR 2) Long period covering whole period, therefore 6 April 2015 - 5 April 2016 = 12/15 x 94920 = 75936

    TY 2016/17: (YEAR 3) Accounts fall in tax year, but as >12 months so tax last 12 months, therefore 1 May 2015 - 30 April 2016 = 12/15 x 94920 = 75936

    TY 2017/18: Onto CY basis so just YE 30 April 2017 profits = 61680

    Hope this helps, sorry was a bit rushed so if you need a further explanation please say and I will expand later.

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