Required:

(a) Calculate Leicester Ltds:

(i) Chargeable gain arising on the disposal of the storage building on 18 September 2019.

(5 marks)

(ii) Corporation tax liabilities arising in respect of the 16 month period ended 30 September 2019. State the due dates for payment of the corporation tax arising and the filing date.

(23 marks)

(b) Advise Leicester Ltd on how it can reduce its corporation tax liability by claiming rollover relief, outlining the conditions that apply, any time limits that should be adhered to, and the consequences of making a claim.

Ignore VAT in this question.

(7 marks) Total: (35 marks)

2. Leicester Ltd is an unquoted trading company that was incorporated in the UK in 1990. The company has always prepared its accounts to 31 May each year, but has decided to change its accounting date to 30 September. It has calculated its adjusted trading profit before capital allowances for the 16 month period to 30 September 2019 to be 1,538,640. On 1 June 2018 the tax written down values for plant and machinery were: Main pool 85,065 Special rate pool 21,260 In the 16 month period ended 30 September 2019, Leicester Ltd purchased: 121,500 7 June 2018 Purchased machinery for the factory (including 9.900 on alterations needed to the factory to install the machinery) 3 August 2018 Secondhand motor car for the sales director (CO2 emissions 117 g/km, 40% private use) 14 December 2018 Sold office furniture (original cost 5,900) 24 June 2019 Purchased a lorry (CO2 emissions of 127 g/km, no private use) 30 July 2019 Purchased machinery for the factory 15 September 2019 New motor car for the factory manager (CO2 emissions 47 g/km, 35% private use) 20,100 4,970 63,250 272,000 8,100 Leicester Ltd received interest on 15,000 12% Treasury stock 2025. The interest is paid six-monthly on 31 December and 30 June each year. Property income receivable for the 16 month period was 24,800 and accrued evenly over the period. On 18 September 2019 Leicester Ltd disposed of a storage building for 283,000. It had purchased the storage building on 6 April 1992 for 56,000, and on 17 March 2008 spent 42,400 extending the building to create more storage room. Legal and professional fees of 2,670 were paid in relation to the purchase and legal and professional fees of 4,950 were paid in relation to the sale. Leicester Ltd had always used the storage building for the purposes of its trade. A donation of 2,175 was made on 31 October 2018 to the National Trust, a registered UK charity. At 1 June 2018 Leicester Ltd had 60,675 trading losses brought forward, and unused capital losses of 2,920. Leicester Ltd has not received any dividends and is not part of a group of companies. Required: (a) Calculate Leicester Ltd's: (0) Chargeable gain arising on the disposal of the storage building on 18 September 2019. (5 marks) (ii) Corporation tax liabilities arising in respect of the 16 month period ended 30 September 2019. State the due dates for payment of the corporation tax arising and the filing date. (23 marks) (b) Advise Leicester Ltd on how it can reduce its corporation tax liability by claiming rollover relief, outlining the conditions that apply, any time limits that should be adhered to, and the consequences of making a claim. (7 marks) Ignore VAT in this question. Total: (35 marks) OPENING YEAR RULES First tax year Actual basis of assessment Date of commencement to following 5 April Second tax year AP ending in second year: - 12 months - 12 mths 12 mths 12 mths 12 mths 12 mths 12 mths 12 mths 12 mths