1. Thomson Ltds income statement for the year ended 31st December 2016 is as follows:

Gross trading profit 1,100,000

Rental income Note 1 40,000

Debenture interest Note 2 11,250

Profit on sale of rental property Notes 1 and 3 175,000

Total = 1,326,250

Less:

Administration expenses (all allowable) 85,000

Distribution cost (all allowable) 60,000

Directors fees 120,000

Bank overdraft interest payable 21,000

Debenture interest payable Note 4 8,000

Depreciation 65,000

Gift aid payments 6,000

Total = (365,000)

Net profit for the year 991,250

Notes:

1. The property was let at a rent of 8,000 per month until the tenants moved out on 30th June 2016; the rental income shown in the income statement above is stated net of interest payable on the loan to purchase the let property.

2. The company acquired 300,000 of 5% debentures on 1st April 2016. Interest is receivable half-yearly on 30 September and 31 March.

3. The rental property has never been used for Thompson Ltds trade. It was sold on 1st August 2016 for 675,000, and it had been purchased for 500,000 on 1st January 2010. 4. 200,000 of 4% debentures were issued for trade purposes on 1st May 2015. The interest is payable on 31 October and 30 April each year.

5. Capital allowances: the balances brought forward as at 1st January 2016 were: General Pool, 45,000 and 12,000 in the special rate pool. The special rate pool includes a car for a director with an agreed private use of 50%. During the year a machine was sold for 5,000 (original cost 12,000) and new machinery costing 50,000 was purchased.

RPI: Jan 2010 217.9 August 2016 264.4

Required: (a) Compute the companys corporation tax liability for the year ended 31st December 2016

(b) State the date that the tax is payable

2. Higgins Ltd is a manufacturing company with no associated companies. The following information is relevant for the 16 months ended 31st July 2018:

Operating profit

The operating profit for the 16 months is 300,000. This is after charging and crediting the following items:

Expenditure:

Depreciation 65,000

Debenture interest payable Note 1 4,300

Legal fees Note 2 5,500

Entertaining Note 3 3,500

Income:

Debenture interest Note 4 16,000

Bank interest Note 5 5,700

Rental income Note 6 68,000

Notes:

1. The debenture interest payable is in respect of a loan taken out to purchase the companys premises.

2. Legal fees include 2,500 fine for not fitting necessary safety devices.

3. Entertaining comprises: entertaining customers staff entertaining 2,000 1,500

4. The debenture is for 300,000, with an interest rate of 4%.

5. Bank interest receivable:

Balance brought forward 0 30.9.17 received 2,500 31.3.18 received 1200

Balance carried forward 2000

Income statement 5,700

6. Rental income was in respect of office accommodation that was surplus to requirements.

7. The balances brought forward for capital allowances at the start of the period were 60,000 in the general pool and 25,000 in the special rate pool. There were no additions or disposals of non-current assets during the period.

8. The rate of corporation tax for the Financial Year 2018 is 19%.

Required: Calculate the corporation tax payable by Higgins Ltd for the 16 months ended 31st July 2018.

3. Graney Ltds income statement for the year ended 31st December 2018 is as follows:

Gross trading profit 900,000

Debenture interest Note 1 17,500

Total = 917,500

Less

Administration expenses Note 2 115,000

Distribution cost (all allowable) 80,000

Directors fees 200,000

Bank overdraft interest payable 12,000

Debenture interest payable Note 3 9,000

Depreciation 55,000

Gift aid payments 2,000

Total = (473,000)

Net profit for the year 444,500

Notes:

1. Interest on 350,000 5% debentures is receivable half-yearly on 30 September and 31 March.

2. Included in administration expenses is 20,000 in respect of the repair to the machinery purchased during the year. The repair was required before the machinery could be used.

3. 300,000 of 3% debentures were issued for trade purposes in 2016. The interest is payable on 31 October and 30 April each year.

4. Capital allowances: the balances brought forward as at 1st January 2018 were: General Pool, 15,000; and 25,000 in the special rate pool. The special rate pool includes a car for a director with an agreed private use of 25%. In July, a machine was sold for 10,000 (original cost in January 2017, 8,000) and new machinery costing 90,000 was purchased.

Required:

(a) Compute the companys corporation tax liability for the year ended 31st December 2018.

(b) State the date on which the tax is payable.

(Indexation allowance between January 2017 and December 2017 = 0.048)