Deferred Tax

 

 

Hi Really appreciate some feedback, 

I`m preparing accounts for a limited company by guarantee, its main source of income is through grants, other income is very minimum, below £4,000.

The depreciation charges are in the region of £3,500. For tax purposes, depreciation is non deductible, but as the income was from grants through which the depreciation has been charged, am i right in thinking the adjustment for the tax calculation will not require to add back depreciation? as the deduction of depreciation was from grant income which is non taxable income. The grants were given for all running costs  and any unspent grant would be a liability and taken to deferred income as it would either have to be repaid, or used in the next year. (this is the grants terms)

I did think that depreciation  should be added back for tax purposes and capital allowances could be claimed, hence resulting in a deferred tax charge. However I`m still determined to agree to it not being deducted due to the income it was deducted from being non taxable. Had depreciated charges not incurred, any unspent grant would have gone to deferred income, and not been liable for tax.

 

Thanks in advance

Comments
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Two questions

BKD |
BKD's picture

What about . . . . ?

andy.partridge |
andy.partridge's picture

Fair point, Andy

BKD |
BKD's picture

Thanks

Abacusms |