I was not sure, I never had a great deal of experience of Corporation Tax (was CIMA and very uncomplicated businesses, tax wise!). The research that I tried seemed to suggest tax was due in the year of receipt….but obviously matching it with the accounting treatment would certainly be preferable. That would avoid paying tax in the earlier year, when ultimately there would be none due if they both occurred in the same year.
So, just to be sure, I can treat it as deferred income and do not need to do anything fancy in the tax calculation in the year that it was received?
Yes, it would need to be repaid if not used, they require proof of when/how it was used.
When the accounts were prepared, most of it had been spent in the following year, the balance has been spent this month (but still the same accounting period as the initial expenditure, i.e. the year after the grant was officially received )
Thank you, the FRS105 quote provides reassurance on the revenue recognition!
That is the result yes….it was just not his original intention though! So in that case, if it happens again, the donated picture should just be sold including VAT?
The original intent was that it was to sell as an agent.
When it comes to sending the payment to the artist, the shop raises a commission invoice showing that the difference between the sale price and the amount that he receives is made up of commission and VAT.
The artist gave a small picture to the shop to sell, then when it did, he waived his commission and said to take it as a donation.
Although the shop is a community one, it does not have charitable status, and pays corporation tax on its donations.
I think that it is a bit clearer now….the result is the same…either sell the picture including VAT or raise a commission invoice of 100% of the sale price. As the sale has already been processed through the till, I will raise a commission invoice to the artist….for them to deal with in their tax affairs. Does that sound correct?
Yes it is there - choose the option of next years tax, find the tax code breakdown and then at the very bottom, there is the chance to change things.
The personal tax account is getting better everyday but is is very hard to find stuff, very little logic has been applied to the design..... especially drilling down into the tax codes!
My answers
Thanks ever so much for your help! The bit that I found was a bit woolly, but sounded feasible, but of course I can not find it now!
I was not sure, I never had a great deal of experience of Corporation Tax (was CIMA and very uncomplicated businesses, tax wise!). The research that I tried seemed to suggest tax was due in the year of receipt….but obviously matching it with the accounting treatment would certainly be preferable. That would avoid paying tax in the earlier year, when ultimately there would be none due if they both occurred in the same year.
So, just to be sure, I can treat it as deferred income and do not need to do anything fancy in the tax calculation in the year that it was received?
Yes, it would need to be repaid if not used, they require proof of when/how it was used.
When the accounts were prepared, most of it had been spent in the following year, the balance has been spent this month (but still the same accounting period as the initial expenditure, i.e. the year after the grant was officially received )
Thank you, the FRS105 quote provides reassurance on the revenue recognition!
That is interesting Paul, I will look into that!
That is the result yes….it was just not his original intention though! So in that case, if it happens again, the donated picture should just be sold including VAT?
The original intent was that it was to sell as an agent.
When it comes to sending the payment to the artist, the shop raises a commission invoice showing that the difference between the sale price and the amount that he receives is made up of commission and VAT.
Sorry, I have missed out some useful information!
The artist gave a small picture to the shop to sell, then when it did, he waived his commission and said to take it as a donation.
Although the shop is a community one, it does not have charitable status, and pays corporation tax on its donations.
I think that it is a bit clearer now….the result is the same…either sell the picture including VAT or raise a commission invoice of 100% of the sale price. As the sale has already been processed through the till, I will raise a commission invoice to the artist….for them to deal with in their tax affairs. Does that sound correct?
Thank you for your comments!
Thanks everyone, it seemed so unfair that I felt that it surely must be wrong!
If he had changed cars at the same time, it would have been pro-rated. Oh well, a strange rule indeed!
Yes it is there - choose the option of next years tax, find the tax code breakdown and then at the very bottom, there is the chance to change things.
The personal tax account is getting better everyday but is is very hard to find stuff, very little logic has been applied to the design..... especially drilling down into the tax codes!
tonycourt, no offence taken. The thread was going off on a tangent, not unusually, and I added to it, albeit of no use to the OP.
That said, I did not state anything incorrect, or contradict Matrix concerning the NRE.