I would like to wish all the ACCA students the very best of luck with their exam results tonight.
You all worked hard and deserve some good news. Stay strong and expect the best. Never give in and never give up.
Single company trading losses are a popular area in the Tax and Advanced Tax exams.
The trading loss must first be offset against total profits in the current period. The claim is an all or nothing relief and cannot be restricted to preserve the qualifying charitable donations. (QCDs) As a result, the QCDs are sacrificed.
Next, the trading loss can be carried back 12 months against total profits in the previous period to generate a tax refund. Once again, the claim is an all or nothing relief and cannot be restricted to preserve the qualifying charitable donations. (QCDs) As a result, the QCDs are sacrificed.
Finally, the remaining trading loss is carried forward against future total income. Partial claims are permitted but the disadvantage here is tax relief is given in the future.
If the trade of the company ceases, then the loss cannot be carried forward anymore.
Instead, terminal loss relief is available, and the loss can be carried back 36 months LIFO to generate a large tax refund.
If you are planning on doing Advanced Tax in September or December 2023, I recommend you purchase Advanced Tax Condensed which will allow you to learn the technical rules. If you then practice the key questions I recommend, you too will be ready for anything the examiner throws at you.
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