CH 3 - Long Periods of Account

Question 1

In long period of account how are split;
* UK Property business income
* Capital allowances for P&M & SBAs
* Non-trading profits (LR)
* Chargeable gains
* Qualifying charitable donations

Answer 1

• UK Property business income - time-apportionment (Accrual basis)
• Capital allowances - two computations required (one for each AP), SBA scale down in short AP
• Non-trading profits (LR) - time-apportionment (Acccrual basis)
• Chargeable gains - Date realised (ie date of disposal)
• Qualifying charitable donations - date paid

Question 2

CH3

What are the steps in calculating long periods of account?

8 steps

Answer 2

1. identify the two APs
2. calculate tax adjusted trading profit
3. time apportione Tax adjusted trading profit before capital allowances
4. calculate the capital allowances separately for each AP
5. calculate the trade profit for each AP
6. prepare CT computations and calculate the TTP for each period (e.g. NTP, UK prop business income, chargeable gains, qualifying charitable donations)
7. calculate the CT liability for each AP (considering marginal rates and if falls into FY2022
8. two separate CT liablities are paid at different times (do not add together)