Share this content
11

Is distribution cost classified in cost of Sales ?

Didn't find your answer?

Hi. All

I work for a logistics company. Now I am going to submit the first corporation tax. For a logistica company, the main cost is distribution cost ( including carrier and delivery).  But when I fill in corporation tax form, I noticed the distribution cost is disallowed expenditure. I am wondering if distribition cost can be classified in cost of sales as it is directly related to our service.  Many thanks 

Carolyn

Replies (11)

Please login or register to join the discussion.

Routemaster image
By tom123
05th Jun 2020 12:27

If I ran a haulage business, then the cost of my trucks would be cost of sales.

Why do you think distribution costs are disallowed?

Thanks (0)
Replying to tom123:
avatar
By happystone
05th Jun 2020 13:00

Thanks for your reply. how about delivery charges by using transport companies for example DPD, Royal mail? I treat them as distribution cost.

Thanks (0)
avatar
By Accountant A
15th Jun 2020 18:22

'ph

Thanks (0)
Replying to Accountant A:
avatar
By happystone
05th Jun 2020 12:58

I fill in the online form in my HMRC business account. As this is the first year corporation tax, we need to submit 13 months income statement. At the first section, I need to fill in the following details for 13 months
turnover
cost of sales
gross profit
distribution cost
administration cost
operating profit

Then at the second section, I am required to fill in the details of the first 12 months. I input turnover, cost of sales then produce gross profit, after that, I am asked to input the breakdown for administration cost. There is no space/ box to fill in distribution cost. finally, the tax is calculated based on the gross profit without deducting the distribution cost. so i am assuming the distribution cost is disallowed.

Thanks (0)
avatar
By Tax Dragon
05th Jun 2020 12:58

Are you using the box for dividend distributions?

Thanks (0)
Replying to Tax Dragon:
avatar
By happystone
05th Jun 2020 13:02

no , I didn't use that. We don't have dividend.

Thanks (0)
Routemaster image
By tom123
05th Jun 2020 13:03

What does this 'logistics company' do?

Does it run trucks, or is it some kind of agent?

I am a manufacturer - and so my costs of sending my goods out (via DPD or whatever) are distribution costs for me.

If I was a haulier (as I said) then the costs of my vehicles would be my own cost of sales.

I am not clear what business model we are talking about here.

Thanks (0)
Replying to tom123:
avatar
By happystone
05th Jun 2020 14:31

We are a company, just like DPD. we collect the goods and parcels then deliver to the customers. For some goods, we use DPD to deliver , sometimes, we hire the lorries to deliver the goods. therefore I treat the charges for DPD and lorries hiring as distribution cost. Hope this makes sense. Thanks.

Thanks (0)
Replying to happystone:
Routemaster image
By tom123
05th Jun 2020 14:35

Hopefully someone else will add to this thread, but, I would treat all those as your cost of sales.

It is a delivery service you are offering, rather than costs of deliveries being ancilliary to your actual trade.

In the end I suppose the distinction does not matter, although of course your gross profit margin will seem strangely high.

Thanks (0)
Routemaster image
By tom123
05th Jun 2020 13:04

If it is indeed a limited company you need to prepare company accounts first before you think about the corporation tax.

Thanks (0)
Replying to tom123:
My photo
By Matrix
05th Jun 2020 14:39

tom123 wrote:

If it is indeed a limited company you need to prepare company accounts first before you think about the corporation tax.

This.

The web filing should involve just putting figures in boxes from accounts and tax computations which have already been prepared. If it is outside your expertise then tell your boss to outsource the work.

Thanks (0)
Share this content

Related posts