7 Flashcards
What is accounting period
Period for which corporation tax is charged
What is period of account
Period for which a company makes up its accounts
How is trading income accounted for
Computer in normal way as for unincorporated businesses but no opening or closing year rules, No private use for companies, Charitable gifts are not a trading expense but can be deducted from the total income. 
If a company pays a patent royalty that is related to trade what is it treated as
Normal trading expense
On what basis is income from non trading loan relationships taxed
Accruals basis. Net credits from nontrading loan relationships consists of bank and building societies interest and interest received from other companies, and annuities and other annual payments not taxable as property income or which can be included in loan relationships regime
What is loan relationships trading items 
Amounts received and paid are taxed/allowed as trading items
Interest payable = trading expense
Interest receivable = trading receipt
Non-trading items calculated on accruals basis
Incidental cost of loan finance – expenses are allowed if incurred directly as a debit
 what is miscellaneous income 
Any item not taxed in any other category such as dividends
What basis are qualifying charitable donations allowed on
Paid basis. Main items include general gifts, gifts of listed shares/securities to charity, gift of land/buildings to a charity.
If charitable payment is for trade purpose, it’s treated as a normal trading expense. This would include small donations to local charities
On what basis are chargeable gains taxed on
Actual basis. Companies are not liable to capital gains tax, it’s chargeable gains are liable to corporation tax.
What is indexation allowance
Was to exclude part of gain due to inflation but is now frozen
What are the restrictions to indexation
RPI goes down = no allowance
None on incidental costs of disposal
Indexation allowance cannot convert a gain into a loss or increase a loss
When is a company considered a large company
One with augmented profits of over £1.5 million
How do Small and medium-sized companies, large companies, very large companies pay corporation tax
Small and medium-sized companies pay 9 months and one day after end of AP. Large companies pay by instalments. very large companies pay at quarterly intervals
When is a company considered very large
One with augmented profits Over £20 million
What are augmented profits
Taxable profits plus dividends received
