Question 1

You work for a company, preparing its tax information. The company has traded for many years. The following accounts are for the year ended 31 March 2021.

Gross Profit 5,150,000

Add:

Profit on sale of non-current assets (note 1) 520,000

Dividend Income: UK companies 50,000

Interest Income (non trade) 45,000

Less:

Depreciation 825,000

Operating expenses (note 2) 1,356,050

Bad debts (note 3) 15,320

Salaries & wages 1,251,360

QCD deductions 5,000

(3,452,730)

Net Profit 2,312,270

Notes:

1. Included in the profit on the sale of non-current assets, is profit that relates to a piece of land disposed of in January 2021 for 1,000,000. The company bought the whole plot for 176,000 in March 1999. In January 2021 the market value of the remaining part of the plot was 1,120,000.

In addition, in February 2021 the company. sold a painting that was in Its boardroom for 25,000. It had purchased this in September 1988 for 5,500.

2. Operating expenses include:

Gifts to customers (1000 bottles of wine) 12,000

Entertaining suppliers 12,500

Staff Christmas party (90 people) 6,000

Parking fines paid for employees 2,500

3. Bad debts are made up of:

Debts written off - trade 4,220

Increase in general provisions 11,100

4. The plant and machinery capital allowance computation for the CAP ending 31/03/20 provided the following carried forward values:

General/main pool 1,150,050

Short-life asset pool 20,000

Analysis of the accounts reveals that the following assets were acquired or disposed of during the 12-month period.

12/06/20 Acquisition of plant costing 945,000

15/07/20 Disposal of the short-life asset for 25,000

15/02/21 Acquisition of a car costing 30,000 (emissions 49 g/km)

01/03/21 Acquisition of a new Audi for 42,000 (emissions 200 g/km)

5. At 01/04/20 there was a trading loss brought forward of 250,000 and a capital loss brought forward of 150,000. The company has a policy to utilise all losses as soon as possible.

6. The following indexation factors are available:

March 1999 December 2017 0.695

September 1988 December 2017 1.565

Required:

Calculate the corporation tax payable for the year ended 31 March 2021 and state when this payment is due. Also, state by which date the CT600 needs to be submitted. (All workings must be clearly annotated. Marks will be awarded for layout)