Harnett Construction Ltd is a close company. It makes up its accounts to 31 December each year. The Statement of Profit or Loss (SPL) of the company for the year ended 31 December 2020 is as follows:

			€
Gross Profit			9,896,450
Distribution Expenses			(958,324)
Administration Expenses			(3,965,142)
Interest Payable			(254,695)
Other Income			315,500
Profit on ordinary activities before taxation			5,033,789
Taxation on profits on ordinary activities			(629,224)
Profit on ordinary activities after taxation			4,404,565

Additional information in relation to the SPL:

1. Depreciation for the year ended 31 December 2020 amounted to €325,850.

2. Motor expenses for 2020 include motor lease expenses of €5,400 and running costs of €2,000, all in respect of the same BMW car. This car had a retail price of €39,850 when first registered and is a CO2 emissions category E vehicle.

3. Insurance includes the following:

		€
Insurance for directors’ motor vehicles		1,650
Buildings insurance for rented office space		3,500
Public liability insurance		8,500

4. 
   
5. The company was involved in negotiating a number of new contracts during 2020. As part of the negotiation process, the directors and shareholders hosted a number of client events. Entertainment costs of €12,000 were incurred in the negotiation process, including accommodation, food and drink. The company ensured that there were equal numbers of staff and clients at each event.

5. Legal Fees are comprised of the following:

	€
Legal fees re customer contracts and trade agreements	35,850
Legal fees in connection with employment contracts	9,550
Legal fees re tenancy agreement for a rented office space	5,540

6. 
   
7. Repairs and maintenance costs relate mainly to repairing equipment and maintaining the company’s production facility. However, the cost also includes €2,750 in respect of repairs carried out on the company’s rented office space (mentioned at point 8 below).

7. Miscellaneous expenses include:

		€
Penalties and interest on late payment of VAT		3,250
Donations to charities		1,000

The donations to charities relate to five contributions of €200 each made by the company to a single local charity during the year ended 31 December 2020. The charity is registered as an eligible charity with the Revenue Commissioners.

8. During the year ended 31 December 2019, the company consolidated its office staff and moved all staff into a space within the production facility. The company then rented out the surplus space in the office building where the office staff had been previously located. ‘Other Income’ includes €55,000 rental income earned during the year ended 31 December 2020.

The tenants found the space very suitable for their purposes and made an offer to buy the office building on 30 September 2020. The offer was accepted on 15 October 2020 for €750,000. The company originally purchased the office building in August 2000 for €400,000 and incurred solicitor’s fees of €2,500 on acquiring the office building and stamp duty of €30,000. Solicitor’s fees paid on the disposal of the office building were €1,925. The SPL includes profit on disposal of the building of €200,000. The costs of acquisition and disposal have not been included in the SPL.

9. ‘Other Income’ includes dividend income received of €45,000 and €15,500 from XYZ Ltd and BMX Ltd respectively (two Irish resident companies) during the year ended 31 December 2020.

10. The SPL includes medical expenses of €3,000 paid on behalf of Dean Matthews, the CEO's cousin. Dean owns 2% of the company but is neither an employee nor a director of Harnett Construction Ltd.

11. Leasing costs include finance lease interest in the amount of €5,150. The finance lease interest was paid to BOF Finance Leasing Company for the lease of computer equipment. The capital repayments, excluding interest, on the finance lease for the year ended 31 December 2020 amounted to €20,000.

12. Plant & Machinery was acquired for trade purposes in 2018 and put into use immediately. The tax-written down value of these assets at 1 January 2020 was €395,100. They cost €526,800 in 2018.

13. The company paid dividends in the amount of €29,000 on 31 March 2021 in respect of the year ended 31 December 2020.

Required (please answer all parts to this question)

1. Prepare the company’s Tax-Adjusted Case I income and Capital Allowances computation for the year ended 31 December 2020. (19 marks)

Calculate the company’s corporation tax liability for the year ended 31 December 2020. (10 marks)