FRS105 accounts and Corporate Investing

FRS105 accounts and Corporate Investing

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Hello,

An IT contractor Ltd Co (non IR35) has chosen to invest £30k with Cofunds and the Annual Tax Summary shows interest and dividend income from Authorised unit trusts and OEICS.

My understanding is that, under FRS 105, this is initially recognised at cost and not revalued. Interest and dividend income is taken to the P & L with the former taxed and dividends from UK co.’s untaxed. As the income is re-invested this is dr investment and cr P & L - correct?

Investment management fees are deducted direct from the investment. How are these dealt with? If these trigger gains/losses should I expect CoFunds to provide a report detailing these? These are not referred to on Annual Tax Summary.

I have spoken briefly to the financial advisor involved although he seems to think that I am asking for too much detail!

Any guidance would be much appreciated.

Replies (4)

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By andrewmead
08th May 2019 10:21

You are correct with your income double entry. If the management fees are taken from the investment then the double entry would be Dr Investment management fees P&L, Cr Investment BS

Thanks (1)
All Paul Accountants in Leeds
By paulinleeds
11th May 2019 17:51

Under FRS 105, you cannot revalue your investments. Cost is the only basis.

I cannot see what the issue is about revaluing assets. The same about deferred taxation (if you understand it).

I think that both should be permitted. I have a client who's purchased £1m of plant over a few years and claimed AIA. That's £190,000 unrecognised timing difference.

I appreciate that with depreciation it is reduced, but it is still a large difference.

The client is still a micro because of staff numbers and turnover.

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By Paul Crowley
16th Sep 2020 04:35

In simple terms
Is the company getting income, but reinvesting that income?

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Replying to Paul Crowley:
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By Elgin
16th Sep 2020 09:38

Correct.

Units etc are sold to meet the ongoing management fees and I was interested in how others where dealing with this re CGT.

Is it standard practice for the broker/investment company to provide an annual CGT summary along with the consolidated tax voucher?

The broker suggests not........

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