5 (a) Carver Ltd was incorporated and began trading in August 2002. It is a close company

Question

5 (a) Carver Ltd was incorporated and began trading in August 2002. It is a close company with no associated

companies. It has always prepared accounts to 31 December and will continue to do so in the future.

It has been decided that Carver Ltd will sell its business as a going concern to Blade Ltd, an unconnected

company, on 31 July 2007. Its premises and goodwill will be sold for ￡2,135,000 and ￡290,000 respectively

and its machinery and equipment for ￡187,000. The premises, which do not constitute an industrial building,

were acquired on 1 August 2002 for ￡1,808,000 and the goodwill has been generated internally by the

company. The machinery and equipment cost ￡294,000; no one item will be sold for more than its original cost.

The tax adjusted trading profit of Carver Ltd in 2007, before taking account of both capital allowances and the

sale of the business assets, is expected to be ￡81,000. The balance on the plant and machinery pool for the

purposes of capital allowances as at 31 December 2006 was ￡231,500. Machinery costing ￡38,000 was

purchased on 1 March 2007. Carver Ltd is classified as a small company for the purposes of capital allowances.

On 1 August 2007, the proceeds from the sale of the business will be invested in either an office building or a

portfolio of UK quoted company shares, as follows:

Office building

The office building would be acquired for ￡3,100,000; the vendor is not registered for value added tax (VAT).

Carver Ltd would borrow the additional funds required from a UK bank. The building is let to a number of

commercial tenants who are not connected with Carver Ltd and will pay rent, in total, of ￡54,000 per calendar

quarter, in advance, commencing on 1 August 2007. The company’s expenditure for the period from 1 August

2007 to 31 December 2007 is expected to be:

￡

Loan interest payable to UK bank 16,000

Building maintenance costs 7,500

Share portfolio

Shares would be purchased for the amount of the proceeds from the sale of the business with no need for further

loan finance. It is estimated that the share portfolio would generate dividends of ￡36,000 and capital gains, after

indexation allowance, of ￡10,000 in the period from 1 August 2007 to 31 December 2007.

All figures are stated exclusive of value added tax (VAT).

Required:

(i) Taking account of the proposed sale of the business on 31 July 2007, state with reasons the date(s) on

which Carver Ltd must submit its corporation tax return(s) for the year ending 31 December 2007.

(2 marks)

Answer 1

正确答案：
(a) (i) Due date for submission of corporation tax return
Carver Ltd intends to cease trading on 31 July 2007. This will bring to an end the accounting period that began on
1 January 2007. A new accounting period will commence on 1 August 2007 and end on the company’s accounting
reference date on 31 December 2007.
Carver Ltd is required to submit its corporation tax return by the later of:
– one year after the end of its accounting period; and
– one year after the end of the period of account in which the last day of the accounting period falls.
Accordingly, the company must submit its corporation tax returns for both accounting periods by 31 December 2008.