Chapter 3 - Long Periods of Account

Question 1

Accounting Periods

Answer 1

APs for CT cannot exceed 12 months, but companies can have accounts drawn up for periods up to 18 months

Question 2

Long POA

Answer 2

Where the accounts exceed 12 months, it must be split in two APs for tax purposes. The first will always be 12 months and the second will always be the remainder

Question 3

Tax Returns

Answer 3

A return must be submitted for each AP where there is a LPOA.

Question 4

Preparing the CT Returns

Answer 4

We split the income and gains between the APs. Then calculate trade profit for the entire period by adding back disallowed items. The resulting tax adjusted profits before CAs are then time apportioned between the APs.

Question 5

Capital Allowances

Answer 5

Prepare separate CA comps for each AP. The WDA and AIA will be apportioned for the second AP, FYA is never apportioned

Question 6

Non Trade Profits and Property Business

Answer 6

Split between APs on a time apportionment basis as accruals basis applies.

Question 7

Chargeable Gains

Answer 7

Split between the APs based on the date of disposal of the asset ie the date of a binding contract of sale (date of exchange of contracts)

Question 8

QCD Donations

Answer 8

Split between APs depending on the date they were paid

Question 9

Dividends

Answer 9

Split between APs based on the date of receipt of the dividend

Question 10

Computations

Answer 10

Two separate comps are prepared to work out the liability for each AP