3 Charitable donations

The 1,750 qualifying charitable donation includes a period end accrual of 750. There was no opening accrual.

4 Pension costs

The 15,000 of pension costs includes unpaid contributions of 1,500 at the year end.

5 Capital allowances

On 1 April 2020 the tax written down value of the main pool was 65,000 and that of the special rate pool was 19,000. In July 2020 Rabbit plc purchased a delivery van for 6,240 (inclusive of VAT). Rabbit plc also sold an Audi car for 18,200. The Audi car was used as a company car by an employee, originally cost 25,000 and has CO₂ emissions of 165g/km.

In addition, electric charge-point equipment was purchased in January 2021 at a cost of 17,760 (inclusive of VAT).

6 Property income

Rabbit plc has rental income of 15,000 in respect of an office block that has been let out during the year ended 31 March 2021. Rabbit plc incurred allowable costs of 22,000 in relation to the rental in September 2020.

In January 2021 Rabbit plc sold another office block which it had used for some administrative functions, to an unrelated third party for 1,500,000. It originally cost 773,458 in January 2002. Substantial repairs were carried out in January 2006 at a cost of 75,000. In June 2021, Rabbit plc purchased an office block for 1,600,000 which it immediately rented out to an unrelated third party. The office block had been built in 1995.

Requirement

Calculate the corporation tax liability for Rabbit plc for the year ended 31 March 2021. (15 marks)

4.2 Flamingo Ltd sold a factory for 600,000 in January 2020 realising a chargeable gain of 160,000. In April 2021, they are planning to buy a new machine for 575,000.

Requirement

1. Explain how rollover relief operates and the conditions which much be fulfilled in order to claim it. (2 marks)
2. Calculate the amount of rollover relief Flamingo Ltd can claim. (2 marks)

Total [19 marks]

Question 4 4.1 Rabbit plc is a manufacturing company. Rabbit plc's accounting profit for the year ended 31 March 2021 is 762,701. This figure is after accounting for the following items: Notes Research and development 1 32,500 Interest 4,500 Qualifying charitable donations 1,750 Pension costs 15,000 Lease costs for Mercedes car (CO2 emissions 187g/km) 5,700 Employee party (cost 155 per employee) 3,565 AN Notes 1 Research and development The 32,500 was the amount of the research and development relief (wholly allowable) that Rabbit plc was entitled to following further research into new products. Interest The 4,500 represents interest payable of 1,000 on a bank overdraft, interest receivable from employees of 7,500 and interest payable of 2,000 on underpaid corporation tax. 2