SECTION 4 Q & A ANSWERS TO MOCK EXAMQUESTIONS 1 (A) MARK KETT –...
2012-13
(Year ended 31 March 2013)
26,400
‒‒‒‒‒‒‒
Tutorial notes
(1) The assessment for 2009-10 is the first twelve months of trading as the
accounting date falling in that year is less than twelve months from the
commencement of trading.
(2) In 2009-10 there are overlap profits of £12,400 in respect of the six-month
period 1 October 2008 to 5 April 2009.
(3) In 2010-11 there are overlap profits of £6,225 in respect of the three-month
period 1 July 2009 to 30 September 2009.
(4) The basis period for 2011-12 is 21 months long. Therefore all nine months of
overlap profits are relieved so that only twelve months worth of profits are
assessed in this year.
(c) If Li changes her accounting date from 30 June to 31 March the application of the
basis period rules will be simplified. The maximum assessment in the year of
cessation will be for twelve months.
Li’s existing overlap profits are fully utilised as a result of the change. Otherwise,
these overlap profits would not be relieved until the cessation of trading.
The disadvantage is that the interval between earning profits and paying the
related tax liability will be nine months shorter with an accounting date of 31
March.
5
(a) (i) (1) The rate of corporation tax at which relief will be obtained, with preference
being given to profits charged at the marginal rate and then the main rate.
(2) The timing of the relief obtained, with a claim against total profits under
s37 CTA 2010 resulting in earlier relief than a claim under s45 CTA 2010
against future trading profits.
(3) The extent to which relief for the qualifying charitable donations will be
lost, since these cannot be carried forward.
(ii)
Year ended
Period ended
30 June
31 March
2013
2011
2012
2010
£
£
£
£
Trading profit
86,600
–
7,300
–
Property business profit
–
4,500
8,100
5,600
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‒‒‒‒‒‒‒
‒‒‒‒‒‒‒
‒‒‒‒‒‒‒
Total
Profits
86,600
4,500
15,400
5,600
Loss relief s37 (W1)
(21,200)
(4,500)
Loss relief s37 (W2)
(15,400)
(5,600)