Question

Brown Ltd, an unquoted trading company, prepares accounts to 31 March 2020. Calculate Brown Ltd's taxable total profits for the year, taking into account various adjustments.

a) Provide detailed figures for adjustments.
b) Compute corporation tax payable by Brown Ltd for the tax year ended 31 March 2020.
c) Specify when Brown Ltd will be required to pay instalments of CIT for the tax year.

Answer 1

To calculate Brown Ltd's taxable total profits, accounting profits must be adjusted for tax purposes, and corporation tax is computed using the corporate tax rate. Corporation tax instalments payment deadlines depend on local tax laws and usually fall in specific months of the accounting period.

Step-by-step explanation:

To calculate Brown Ltd's taxable total profits for the year ended 31 March 2020, we must first understand that the taxable profits consist of the company's accounting profits adjusted for tax purposes. Adjustments may include removing non-deductible expenses, adding back disallowed provisions, and possibly applying for capital allowances. Following this, the corporation tax payable by Brown Ltd can be computed by applying the relevant corporate tax rate to the adjusted taxable total profits.

For corporation tax instalments, large companies with taxable profits exceeding a threshold are required to pay their corporation tax in instalments. As Brown Ltd is an unquoted trading company, the rules can vary based on local tax laws. Typically, instalments are due in the 7th and 10th month of the current accounting period and the 1st and 4th month of the following period.