Are prepaid expenses like rent, rates paid in advance are allowable for calculating corporate tax?
Any feed back is appreciated. thanks
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No
You simply cannot do that.
Are you an accountant? Wait! I am psychic, I know the answer to that.
With respect this is a nonsense question.
Prepaid expenses recognised as such in accounts are by their very nature not allowable for tax because they are absent from the profit and loss account.
Prepaid expenses not recognised as such in accounts are also not allowable for tax because they only appear in the profit and loss account as a result of an accounting error (I.e. the failure to recognise them as prepayments) which has to be corrected in the tax calculations.
Unless...
Unless you work for a firm where I once had the pleasure of working where prepayments did not exist. Unless of course there was a need to boost profits for the year in question.
Some harsh comments ...
... small unincorporated business under the VAT threshold can opt for cash accounting where such items woud be allowed when paid, not on a pro-rated basis - the OP was only asking clarification this does not extend to small companies - the responses have been somewhat nasty!
How can you say that
John is not nasty. He is just plain speaking. I think you are confusing the two things.
That is always the excuse ...
... for rudeness.
We are not all perfect, cannot all communicate perfectly - especially when it is in an area we are not au-fait with, and I try to read questions with that in mind.
That said, even the best of us jump in two footed sometimes, only to get egg on our faces!
I didn't think the comments were nasty. Especially considering the OP has asked a few questions on AWeb in an attempt to do a DIY job.
OGA, instead of full-time, can you be the resident moaner on a part-time basis from now on?
Only if ...
... the pays the same, but then, hey, no one has to read what I write :o)
I am just taking onboard the requests to lower the aggression and avoid the cutting/sarcastic remarks to stop threads over-heating though ;o)
Have I misunderstood the rules?
I thought the cash basis wasn't allowed for companies and therefore not allowable for corporation tax!
@shirley
No, rules understood, apart from op who was seeking clarification no one has said companies can use cash basis.
Returning to the enquiry.......
I see, from at least one previous enquiry on here, you have been (strongly) advised to seek the services of an accountant.
My contemporaries have not made this suggestion from a personal and financial viewpoint. They have simply seen this type of scenario, in their offices, time and time again. Individuals seeking "free" knowledge on the basis that it can then be applied to their circumstances. Quite frankly, it can't.
You've mentioned before that you company, makes very little profit and, with that in mind, I can only presume that cash flow is also difficult? That being said many accountants would pitch a suitable pre-arranged/agreed fixed fee, payable on a monthly basis, after meeting with you, possibly in an initial free consultation.
The DIY approach, which you have employed thusfar will simply end in tears. Maybe not this year, maybe not the next but, at some stage in the future, you'll have a wake up call.
Please consider this advice in the spirit in which it was intended.
Advisory Services
I see, from at least one previous enquiry on here, you have been (strongly) advised to seek the services of an accountant.
But looks like the OP intends to provide tax advisory services!