Practical corporation tax advice on disposal of trade
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.
- Samadian effect on self employed student support workers 172 4
- Changes to class 2 NIC's 190 3
- Are there Special Rules for Agencies? 357 8
- Client RTI Shows payments not his 146 4
- UK company paying dividend to foreign shareholder 146 3
- LLP as member of LLP 99 1
- Why should I retain membership? 2,753 48
- B2B vat in the EU 143 3
- Coding Notice 169 4
- Alerting clients versus walking away from clients 460 7
- Vat 287 7
- SA online - 4 hour limit 1,283 13
- Recharge for private use of a company car 198 3
- Funding Circle Servicing Fee 167 2
- Surprise visit from HMRC! 2,496 18
- CT/CIS offset 149 2
- Statutory accounts, current company address, or one that was correct at EOY? 198 4
- Trade name 198 3
- Musician - Allowable Travel expenses 146 1
- New business - journal entries 331 20
- Auto enrolment excuses 826
- Feedback on accounts production software for IFRS 711
- Add T&Cs to Sales Order in Sage 394
- Social investment tax relief 210
- Digita Hosted Software 207
- Call Centre Data Costs 195
- Buying goods in US and selling them to company in US 165
- Travel costs and contractors 159
- Problems with Sage 50 Payroll v21(2015) 150
- accounting for this transaction 147