trading profits and vat

Question 1

true or false - the basis calculation of trading profits is chargeable reciepts - deductible expenses

Answer 1

chargeable recipets - deductible expenses - capital allowances

Question 2

true or false - the cost of purhcasing new plant and machinery will be a deductible expense when calculating trading profits

Answer 2

false the cost will not be a deductible expense - capital in nature but capital allowances may be available.

Question 3

explain the purpose of capital allowances

Answer 3

capital allowances allow a buisness to deduct some of the cost of plant and machinery from chargeable reciepts to reduce tax liability. the aim is to encourage investment

Question 4

true or false - if an unincoporated business makes a traidng loss during an accounting period there will be nil liability to tax. in addition tax relief may be available in respect of the loss

Answer 4

true - if an unincoprorated bsiness makes a

Question 5

explain when vat registration is compulsory