Incorporation

Question 1

Income Tax

Answer 1

Trade ceases

Closing year rules

Balancing Adjustments on P&M

Can elect to transfer p&m at TWDV

Stock transferred at market value unless elect higher of cost and price paid.

Trading losses:

Terminal loss releif, carry forward against salary/dividends, s.64 against net income, s.771 against gains

Question 2

NI

Answer 2

Stop paying class 2 and 4

becomes an emp’ee and pays Class 1 Primary

Company pays Class 1S on earnings

Company pays 1A on benefits

Question 3

CGT

Answer 3

Sole trade disposes of chargeable assets: L+B and Goodwill

Incorp relief

BADR

Can claim gift relief

Question 4

VAT

Answer 4

Sole trader must deregister, co must register

If transfer of going concern met, business is outside of VAT:

• Company carry on same trade
• Business is a going concern
• No break in trading
• Co becomes VAT registered..

Question 5

CT

Answer 5

Notify of chargeability to tax within three months of start of first AP

Salary, Class 1S, 1A are allowable

Dividends paid are not allowable expenses

Close Co.