The draft year-end accounts for Rodin Ltd are as follows:-

Rodin Limited – Year Ended 31^st March 2021

                                                                                    Note

Sales Revenue                                                                                             £2,500,000

Cost of Sales                                                                                                (£1,200,000)

Gross Profit                                                                                                   £1,300,000  

Operating Expenses

Depreciation                                                                                                 (£30,000)

Premises Costs                                                        1                                  (£95,000)

Motor Expenses                                                       2                                  (£14,000)

Entertainment                                                           3                                  (£10,000)

Staff Costs                                                                                                    (£530,000)

Charitable donation to British Red Cross                                                    (£6,000)    

                                                                                                                          £615,000

Other Income

Property Business Income                                     4                                      £5,200

Bank Interest Received                                                                                      £500

Profit on the disposal of freehold building          5                                  £200,000

Draft Profit                                                                                                  £820,700

Notes

1. The premises costs are for heat & light, insurance and general maintenance of Rodin’s premises and all relate to the trading activities of Rodin Ltd.

2. The motor expenses includes £2,000 relating to the Managing Director’s car which he used 30% of the time for private use.

3. The £10,000 entertainment expenditure comprised:-
   • £4,000 for a Christmas party for the 20 members of staff
   • £400 for pens engraved with Rodin’s name for their top ten customers
   • The remainder of the £10,000 related to general entertainment of customers and suppliers   

(question continued overleaf)

4. The Property Business Income relates to the surplus office space which Rodin Ltd lets out to another business

5. During the year ended Rodin Ltd disposed of an old office building that it still owned. Rodin Ltd had purchased it in June 2010 for £500,000 and which it sold in November 2020 for £700,000.

The following indexation factors are provided:-

• June 2010 to December 2017             0.241
• June 2010 to November 2020             0.310

6. The brought-forward Tax Written Down Value on Rodin Ltd.’s main pool as at 1^st April 2020 was £25,000. On the 1^st March 2021 Rodin Ltd purchased new manufacturing machinery worth £300,000.  

Requirements

Calculate the following:-

1. Maximum capital allowances claim (credit will be given for the layout of the capital allowances computation)                                                              (3 marks)

2. Tax adjusted trading profit. Your calculations should commence with the Draft Profit figure of £820,700 and then show each adjustment required (marking items where no adjustment is required with a ‘0’) including brief explanations of your tax treatment of each item where appropriate.                                                          (7 marks)

3. Chargeable gain on the sale of the freehold building                                  (4 marks)

4. Total taxable profits and corporation tax payable                                        (5 marks)

5. State the dates by which:-
   1. The corporation tax is payable
   2. The corporation tax return is due to be filed with HMRC                (1 mark)