Question 1

Section B: Case 1 - Vanguard Robotics

Scenario: Vanguard Robotics was run as a sole trade by Liam, developing specialized robotic arms for manufacturing. Liam prepared accounts to 31 December each year. On 30 September 2023, Liam ceased trading as a sole trader and transferred the entire business as a going concern to a newly formed company, Vanguard Robotics Ltd, in exchange for shares.

Question: What is the basis period for Liam's final tax year of trading (2023/24) as a sole trader?

Accepted Answer

Apply the cessation rules for basis periods: The final basis period runs from the end of the basis period for the previous tax year up to the date of cessation.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Trying to apply the transitional rules for ongoing businesses to a cessation scenario.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA TX — Taxation Practice Exam 1

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