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ACCA · Question 26 · Corporation tax liabilities
Section B - Case 3: Titanium Forging PLC
Titanium Forging PLC is a heavy manufacturing company. It recently changed its accounting date, resulting in a 15-month period of account from 1 January 2023 to 31 March 2024.
How must this 15-month period of account be split for Corporation Tax purposes?
Section B - Case 3: Titanium Forging PLC
Titanium Forging PLC is a heavy manufacturing company. It recently changed its accounting date, resulting in a 15-month period of account from 1 January 2023 to 31 March 2024.
How must this 15-month period of account be split for Corporation Tax purposes?
Answer options:
A.
It is treated as a single 15-month accounting period.
B.
Into a 3-month period to 31 March 2023, and a 12-month period to 31 March 2024.
C.
Into a 12-month period to 31 December 2023, and a 3-month period to 31 March 2024.
D.
Into two equal 7.5-month periods.
How to approach this question
Apply the rule that a Corporation Tax accounting period cannot exceed 12 months. A longer period of account is split into the first 12 months and the remainder.
Full Answer
C.Into a 12-month period to 31 December 2023, and a 3-month period to 31 March 2024.✓ Correct
For Corporation Tax, an accounting period cannot exceed 12 months. When a company has a period of account longer than 12 months, it must be split. The rule is to take the first 12 months as the first accounting period (1 Jan 2023 to 31 Dec 2023), and the remainder as the second accounting period (1 Jan 2024 to 31 Mar 2024).
Common mistakes
Splitting the period so that the 12-month period ends on the new accounting date (Option B).
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