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Company not a going concern - CT implications?

Company not a going concern - CT implications?

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If a company is, for whatever reason, not a going concern and the statutory accounts are prepared as such (say on a break-up basis), what are the implications of this from a corporate tax perspective? The starting point for a company's tax computation is the profit before tax, but are there any adjustments needed as a result of the accounts not being prepared on a going concern basis?

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By Anonymous.
01st Jul 2020 17:42

I would say Going Concern isn't relevant provided that trading hasn't ceased.

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Replying to Anonymous.:
RLI
By lionofludesch
01st Jul 2020 23:20

Quote:

I would say Going Concern isn't relevant provided that trading hasn't ceased.

I disagree. There may well be write-downs. Stock is the prime example.

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Replying to lionofludesch:
Psycho
By Wilson Philips
02nd Jul 2020 06:56

But such write-downs should already be reflected if accounts prepared on a break-up basis. Going concern status may impact on how the accounts are drawn. up, which does of course flow through to tax. But going concern or not status has no direct impact on the tax computations themselves, which is what I read the query to be about.

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Replying to Wilson Philips:
RLI
By lionofludesch
02nd Jul 2020 07:19

Fair comment. Hard to say without knowing exactly what's been done and what hasn't.

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By Anonymous.
02nd Jul 2020 11:48

Quote:

I disagree. There may well be write-downs. Stock is the prime example.

I was thinking what WP wrote. Going concern isn't a tax concept so you just do what others have suggested and still start with the accounts profit but double check any adjustments made as a consequence of the going concern situation.

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Replying to lionofludesch:
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By Anonymous.
02nd Jul 2020 11:49

Double posted

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Hallerud at Easter
By DJKL
01st Jul 2020 18:03

You just need to go through the write offs made and consider which are allowable for tax (leave alone) and which are not (add back)

So if say plant is written down you add it back, stock write downs I suspect you would leave.

I must say though, if not a going concern why is it still trading, it potentially could be trading whilst knowingly insolvent?

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Replying to DJKL:
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By zebaa
02nd Jul 2020 13:01

In response to your question 'it potentially could be trading whilst knowingly insolvent?' We don't know, but it could be the CV19 provisions.

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