CH 2 - Adjustment of profit

Question 1

Provisions are only allowed if:

as per FRS 102

Answer 1

• there is an obligation to make a payment at the accounting period end as a result of a past event; and
• it is probable that a payment will be required to settle the obligation; and
• a reliable estimate can be made of the amount of the obligation.

Question 2

When rental income can be taxed as trading income

Answer 2

ITTOIA 2005, s.21

where
* the premises being let are temporarily surplus to requirements; and
* the let premises are part of a building in which another part is being used in the trade; and
* the letting receipts are relatively small.

*surplus - owned & used within 3years not inded to be rent out over 3y