Limited company made £100k of investments during its company year - all investments in publicly traded shares (not funds or unit trusts, they bought shares directly in companies).
Under FRS102 we need to show the investments at market value at year end which is easy to do as they are publicly traded shares. The result is an unrealised gain of roughly £30,000.
Our problem comes with regards to Corporation tax - my gut says that as the gains are unrealised there can not be a Corporation tax liability from them. Instead we should calculate what the Corp tax liability would have been if they had been realised gains at the end of the company year and include this as deferred tax in the accounts. In the CT600 we would simply deduct the £30k unrealised gain from the accounting profit to arrive at the taxable profit.
I then spoke to a well known (very large) firm of financial advisers that a number of my clients use and they sent me a factsheet which they produced in mid 2018 stating that only investments in funds that are set-up as Unit Trusts do not result in a Corporation tax liability for unrealised gains i.e. investing in shares directly will result in a Corporation tax liability for unrealised gains - they go on to say this could cause the company major cash flow issues so they are not referring to deferred tax they are referring to straight-up payable Corporation tax.
I've searched for hours to try and find the answer. I've read numerous previous questions that relate to this and I cannot find a definitive answer anywhere. I've spoken to HMRC's Corp tax helpline (on hold for 35 minutes before I got through) and they could not answer my question or tell me where to look.
Does anyone know the answer and can point me in the direction of any guidance?
It would be hugely appreciated - I've pulled so much hair out over this I don't have much left :(
As always - thank you to everyone for taking the time to read my question and any thoughts you have are very welcome.
p.s. If I have made any silly errors in any of the above please do feel free to point them out as bluntly as you like - I can take it :