QUESTION 2 Kachana Ltd has been in business for many years preparing accounts to 31 December each year. The company has always calculated and paid provisional income tax on the due dates. At the start of the tax year 2020, the company estimated the provisional taxable profits to be K1,200,000. Provisional income tax was calculated correctly and paid on the appropriate due dates. At the end of the tax year 2020, the actual final taxable profit was K1,500,000. The company calculated the balance of income tax for the tax year 2020 and also calculated the provisional taxable profit for the tax year 2021 of K2,100,000 in January 2021. In late January 2021, a fire gutted the company's main warehouse and destroyed property worth millions of Kwacha. Following the disaster, the company experienced a strain on its cash resources and as a result, started facing challenges in carrying enough inventories to meet sales demand, leading to a reduction in sales volume. The company therefore revised the provisional taxable business profit for the tax year 2021 from the original estimate of K2,100,000 to K1,600,000. As a result of the poor liquidity position, the company experienced after the fire disaster, the provisional income tax for the quarter ended 31 March 2021, was paid on 9 July 2021 and the return of provisional income for the tax year 2021 was submitted on that date. The provisional income tax for the quarter ended 30 June 2021 was paid on 9 September 2021, whilst the balance of income tax for the tax year 2020 was paid on 20 September 2021 with the self-assessment income tax return for the tax year 2020 also being submitted on 20 September 2021. Cash flow problems were fully resolved after 20 September 2021 and the directors are now confident that all the outstanding taxes thereafter, will be paid promptly on the relevant due dates. You should assume that the income tax rates for the tax year 2021 apply throughout, and that the Bank of Zambia discount rate is 8.5 % per annum. Required: (1) Advise Kachana Ltd of the amounts of penalties and interest charged on overdue taxes on all payments made up to and including 20 September 2021. (ii) Identify the dates when tax returns were submitted late and calculate the amounts of penalties for late submission of those returns. [15 Marks] QUESTION 2 Kachana Ltd has been in business for many years preparing accounts to 31 December each year. The company has always calculated and paid provisional income tax on the due dates. At the start of the tax year 2020, the company estimated the provisional taxable profits to be K1,200,000. Provisional income tax was calculated correctly and paid on the appropriate due dates. At the end of the tax year 2020, the actual final taxable profit was K1,500,000. The company calculated the balance of income tax for the tax year 2020 and also calculated the provisional taxable profit for the tax year 2021 of K2,100,000 in January 2021. In late January 2021, a fire gutted the company's main warehouse and destroyed property worth millions of Kwacha. Following the disaster, the company experienced a strain on its cash resources and as a result, started facing challenges in carrying enough inventories to meet sales demand, leading to a reduction in sales volume. The company therefore revised the provisional taxable business profit for the tax year 2021 from the original estimate of K2,100,000 to K1,600,000. As a result of the poor liquidity position, the company experienced after the fire disaster, the provisional income tax for the quarter ended 31 March 2021, was paid on 9 July 2021 and the return of provisional income for the tax year 2021 was submitted on that date. The provisional income tax for the quarter ended 30 June 2021 was paid on 9 September 2021, whilst the balance of income tax for the tax year 2020 was paid on 20 September 2021 with the self-assessment income tax return for the tax year 2020 also being submitted on 20 September 2021. Cash flow problems were fully resolved after 20 September 2021 and the directors are now confident that all the outstanding taxes thereafter, will be paid promptly on the relevant due dates. You should assume that the income tax rates for the tax year 2021 apply throughout, and that the Bank of Zambia discount rate is 8.5 % per annum. Required: (1) Advise Kachana Ltd of the amounts of penalties and interest charged on overdue taxes on all payments made up to and including 20 September 2021. (ii) Identify the dates when tax returns were submitted late and calculate the amounts of penalties for late submission of those returns. [15 Marks]