Question 1 Angus Limited, a trading company, prepares accounts to 31 March each year. The draft pre-tax profits for Angus Limited for the year ended 31 March 2022 are 1,800,000. The following items have been added or deducted in arriving at the draft pre-tax profits: Notes Depreciation 40,400 2,000 Loan interest payable Qualifying donation Dividends received 6,000 Car leasing charges Bank interest receivable 18,000 4,200 3,000 Notes (1) 1,500 interest related to a loan used to purchase an investment property. 500 related to interest on loan notes to finance the company's trading activities. (2) The qualifying donation of 10,000 in the accounts comprises 6,000 paid in June 2021 and an accrual of 4,000 that the company had agreed to pay but was not paid until May 2022. (3) Dividends were received from unrelated UK companies. (4) Car leasing charges of 5,000 were incurred for a car used by the managing director. The car has emissions of 40g/km and is used 20% for private purposes. In addition, the pre-tax profit needs to be adjusted for the following items: Plant and Machinery In April 2021 the tax written down value on the main pool was 60,000. The following transactions took place during the year ended 31st March 2022 July 2021 Bought new plant for 30,000 August 2021 Bought a new delivery van for 15,000. The original price was 18,000 but it was sold at a discounted price as it was ex display. The van has CO2 emissions of 5%. May 2021 Sold a motor car for 18,000. It had been bought during the year ended 31st March 2021 for 17.000 and had been included in the main pool. June 2021 Purchased a motor car for 27,000 with a C02 emission rate of 30 grams per kilometre. This car was used by the marketing director who estimated Page 5 of 10 1234 she used it 30% for private purposes. Investment Property Angus Limited bought an investment property in May 2020 for 80,000. Legal costs relating to the purchase of 5,000 were incurred in addition. The company sold the asset in March 2022 for 110,000 and paid additional legal costs of 1,000 and commercial estate agents fees of 2,000. Additional Note For corporation tax payments Angus Ltd was a large company for the year ended 31st March 2021 and will be for the year ended 31st March 2022. Requirement a) Compute Angus Ltd's taxable total profits for the year ended 31 March 2022, making clear your treatment of each item. (18 marks) b) When will Angus Ltd be required to pay instalments of corporation tax for the year ended 31 March 2022? (2 marks) c) How would your answer differ if Angus Limited was a very large company or was a company that was neither large nor very large? (2 marks) Total 22 marks Question 1 Angus Limited, a trading company, prepares accounts to 31 March each year. The draft pre-tax profits for Angus Limited for the year ended 31 March 2022 are 1,800,000. The following items have been added or deducted in arriving at the draft pre-tax profits: Notes Depreciation 40,400 2,000 Loan interest payable Qualifying donation Dividends received 6,000 Car leasing charges Bank interest receivable 18,000 4,200 3,000 Notes (1) 1,500 interest related to a loan used to purchase an investment property. 500 related to interest on loan notes to finance the company's trading activities. (2) The qualifying donation of 10,000 in the accounts comprises 6,000 paid in June 2021 and an accrual of 4,000 that the company had agreed to pay but was not paid until May 2022. (3) Dividends were received from unrelated UK companies. (4) Car leasing charges of 5,000 were incurred for a car used by the managing director. The car has emissions of 40g/km and is used 20% for private purposes. In addition, the pre-tax profit needs to be adjusted for the following items: Plant and Machinery In April 2021 the tax written down value on the main pool was 60,000. The following transactions took place during the year ended 31st March 2022 July 2021 Bought new plant for 30,000 August 2021 Bought a new delivery van for 15,000. The original price was 18,000 but it was sold at a discounted price as it was ex display. The van has CO2 emissions of 5%. May 2021 Sold a motor car for 18,000. It had been bought during the year ended 31st March 2021 for 17.000 and had been included in the main pool. June 2021 Purchased a motor car for 27,000 with a C02 emission rate of 30 grams per kilometre. This car was used by the marketing director who estimated Page 5 of 10 1234 she used it 30% for private purposes. Investment Property Angus Limited bought an investment property in May 2020 for 80,000. Legal costs relating to the purchase of 5,000 were incurred in addition. The company sold the asset in March 2022 for 110,000 and paid additional legal costs of 1,000 and commercial estate agents fees of 2,000. Additional Note For corporation tax payments Angus Ltd was a large company for the year ended 31st March 2021 and will be for the year ended 31st March 2022. Requirement a) Compute Angus Ltd's taxable total profits for the year ended 31 March 2022, making clear your treatment of each item. (18 marks) b) When will Angus Ltd be required to pay instalments of corporation tax for the year ended 31 March 2022? (2 marks) c) How would your answer differ if Angus Limited was a very large company or was a company that was neither large nor very large? (2 marks) Total 22 marks
