Computing Taxable Total Profits (2) Flashcards
Capital allowances and reduction?
Never any reduction of allowances to take account of any private of an asset
What does director or employee suffer in capital allowances?
A txable benefit instead
If accounting period is longer than 12 months for capital allowances?
Divided into one for first 12 months. And one for the balance. Each division must carried out for each period separately
Disposal of assets on which enhanced CA were claimed?
Give rise to balancing charges
What is a loan relationship?
If a company borrows or lends money, including issuing or investing in loan stock or buying gilts
Where does interest (and other debt costs such as arrangement fees) arise?
As a consequence of any loan taken or extended
How is interest classified in loan relationship?
As trading or investment depending on reason for the loan. Interest is always on an accruals basis for companies
Why is no adjustment of profits required in trading loan relationships?
Income and expenses on trading loans form part of trading income
When is trading loan relationship income possible?
The trade is one of money lending. Unlikely to happen
Loans taken out by a company for trade purposes include loans used to?
Purchase plant and machinery
Provide working capital
Purchase property used for trading purposes
What is chargeable as interest income in NTLR
Net credit on the pool
What are loans taken out by a company for non-trade purposes?
Purchase property which is then let out
Acquire share capital of another company
What do creditor NTLR include?
Depositing cash on deposit at a bank
Investing in loan stock or gilts
What is always treated as an NTLR?
Interest payable to/receivable from HMRC on late or overpaid tax
What companies use when calculating property business income
Always use accruals basis, unlike individuals
