A limited company operated a trade as a retail seller of ladies clothing from leasehold shop premises. The company’s normal accounting reference date is 31 December.
On 18 August 2011 the company sold the business and received payment for goodwill, leasehold, stock and fixtures.
The company has a further leasehold interest in office accommodation, which some years ago became surplus to its own requirements. These premises are sublet, rent receivable being exactly equal to rent payable.
My questions are as follows:
- In calculating the company’s profits chargeable to corporation tax, do I need to do so for the period 1 January to 18 August 2011, treating the latter date as the end of a corporation tax accounting period, because of the disposal of the retail trade on that date?
- If that is the case and the company’s accounting date remains 31 December, another corporation tax accounting period would presumably have started on 19 August and ended on 31 December 2011. I assume that during this period, and in future years, the company is a close investment company, since its only source of income is rent receivable from the sublet.
- Assuming that the above is correct, i.e. that there are two separate corporation tax accounting periods, is there a practical way to divide income and expenditure between the two periods? Clearly all retail sales, costs of sales and leasehold shop costs would be included in the period to 18 August, but would it be acceptable to divide rent receivable and all other overhead expenses between the two periods on a time-apportionment basis?
- Am I missing anything else?!!!
Many thanks for any guidance and assistance.