£

Trading income (W1)

Non-trading loans
Dividends
Chargeable gain
Taxable total profits
W1 – Trading income
£
Draft accounting profits
Depreciation
Loan interest payable
Profit on disposal of asset
Exempt dividends received
Bank interest receivable
Employee loan interest
Capital allowances
Trading income

2b In the year ended 31 March 2020 Sigil Ltd expects taxable total profits of £213,000 and is
expected to receive the same amount of dividends as in the year ended 31 March 2019.
Requirement
Complete all the boxes below and state the first date by which any corporation tax should
be paid in relation to the year ended 31 March 2020. Input the date in the format
DD/MM/YYYY (eg, 03/04/2019 for 3 April 2019).
£
Taxable total profits
Exempt ABGH distributions
Augmented profits

First payment of corporation tax due date

LOs 5b, 5c, 5d

3a Bryn Ltd, an unquoted trading company, prepares accounts to 30 September and has one
related 51% group company. The draft accounting profits for the year ended 30 September
2018 are £890,000. The following items have been added or deducted in arriving at the
draft accounting profit:
Note £
Depreciation 45,500
Loan interest payable 1 9,000
Qualifying donation 2 8,000
Exempt dividends received 3 27,000
Bank interest receivable 4,200
Notes:
(1) Interest payable on a loan to service working capital.
(2) The qualifying donation of £8,000 in the accounts comprises £1,600 paid during the
accounting period and an accrual of £6,400 that the company had agreed to pay but
was not paid until 22 December 2018.
(3) Exempt dividends received from unrelated UK companies.

ICAEW 2019 Scenario-based questions: corporation tax 105

 In addition, the following items have not yet been included in the accounts:
 Gifts of one bottle of wine costing £10 to each of 30 employees and each of 22 clients.
 The company purchased a new car for £30,000 with emissions of 45 g/km for use by
the sales director with 40% private use. The tax written down value on the main pool at
1 October 2017 was £0.
Requirement
Using the standard format below, compute Bryn Ltd's taxable total profits for the year
ended 30 September 2018. You should enter a number in each relevant box. If an amount
is not taxable or no adjustment is required you must enter a zero or a dash into the relevant
box.
£
Trading income (W1)
Non-trading loans
Dividends
Qualifying donation
Taxable total profits
W1 – Trading income
£
Draft accounting profits
Depreciation
Loan interest payable
Qualifying donation
Exempt dividends received
Bank interest receivable
Gifts
Capital allowances
Trading income

3b In the year ended 30 September 2019 Bryn Ltd expects taxable total profits of £980,900
and is expected to receive exempt dividends of £40,000 from unrelated UK companies and
£10,000 from an unrelated Spanish company.
Requirement
Complete all the boxes below and state the first date by which any corporation tax should
be paid in relation to the year ended 30 September 2019. Input the date in the format
DD/MM/YYYY (eg, 03/04/2019 for 3 April 2019).
£
Taxable total profits
Exempt ABGH distributions
Augmented profits

First payment of corporation tax due date

LOs 5b, 5c, 5d

106 Principles of Taxation: Question Bank ICAEW 2019

 4a Lundy Ltd, an unquoted trading company, prepares accounts to 31 March and has no
related 51% group companies. The draft accounting profits for the year ended 31 March
2019 are £2,860,000. The following items have been added or deducted in arriving at the
draft accounting profit:
Note £
Depreciation 148,700
Loan interest payable 1 3,800
Property income 2 25,000
Exempt dividends received 3 9,000
Bank interest receivable 7,000
Notes:
(1) Interest payable on a loan to buy an investment property.
(2) Property income relates to an investment property which was rented out to an
unrelated company from 1 October 2018 for £5,000 per month payable in advance.
The tenant paid the rent for March 2019 late on 8 April 2019.
(3) Exempt dividends of £6,000 received from unrelated UK companies and £3,000
received from an unrelated Italian company.
In addition, the following items have not yet been included in the accounts:
 During the accounting period, legal fees of £4,300 were incurred, of which £4,000
related to the investment property purchase and £300 related to debt collection in
respect of trade customers.
 The company purchased a pool car with emissions of 109 g/km during the year ended
31 March 2019 costing £40,000. The tax written down value on the main pool at 1 April
2018 was £0.
Requirement
Using the standard format below, compute Lundy Ltd's taxable total profits for the year
ended 31 March 2019. You should enter a number in each relevant box. If an amount is not
taxable or no adjustment is required you must enter a zero or a dash into the relevant box.
£
Trading income (W1)
Non-trading loans
Dividends
Property income
Taxable total profits
W1 – Trading income
£
Draft accounting profits
Depreciation
Loan interest payable
Property income
Exempt dividends received
Bank interest receivable
Legal fees
Capital allowances
Trading income

ICAEW 2019 Scenario-based questions: corporation tax 107

 4b In the year ended 31 March 2020 Lundy Ltd expects taxable total profits of £3,100,000 and
is expected to receive the same amount of dividends as in the year ended 31 March 2019.
Requirement
Complete all the boxes below and state the first date by which any corporation tax should
be paid in relation to the year ended 31 March 2020. Input the date in the format
DD/MM/YYYY (eg, 03/04/2019 for 3 April 2019).
£
Taxable total profits
Exempt ABGH distributions
Augmented profits

First payment of corporation tax due date

LOs 5b, 5c, 5d

5a Knight Ltd, an unquoted trading company, prepares accounts to 31 December and has one
wholly owned subsidiary, Sword Ltd. The draft accounting profits for the year ended
31 December 2018 are £467,000. The following items have been added or deducted in
arriving at the draft accounting profit:
Note £
Depreciation 32,500
Loan interest payable 1 6,400
Property income 2 40,000
Exempt dividends received 3 4,500
Bank interest receivable 5,100
Marketing fees 4 2,000
Notes:
(1) Interest payable on a loan to buy factory premises.
(2) Property income relates to renting out (for £40,000 pa) spare space in Knight Ltd's
office building to an unrelated company throughout the accounting period. However,
the tenant has left without paying rent for the period from 1 October 2018 to
31 December 2018 and Knight Ltd is unable to recover this.
(3) Exempt dividends received from Sword Ltd, Knight Ltd's wholly-owned subsidiary.
(4) Marketing fees of £2,000 related to advertising one of the company's products online
(£1,200) and entertaining prospective customers (£800).
In addition, the following item has not yet been included in the accounts:
 The company purchased 10 vans during the year ended 31 December 2018 costing
£80,000 in total. The vans had emissions of 100 g/km. The tax written down value on
the main pool at 1 January 2018 was £0.
Requirement
Using the standard format below, compute Knight Ltd's taxable total profits for the year
ended 31 December 2018. You should enter a number in each relevant box. If an amount is
not taxable or no adjustment is required you must enter a zero or a dash into the relevant
box.

108 Principles of Taxation: Question Bank ICAEW 2019

 £
Trading income (W1)
Non-trading loans
Dividends
Property income
Taxable total profits
W1 – Trading income
£
Draft accounting profits
Depreciation
Loan interest payable
Property income
Exempt dividends received
Bank interest receivable
Marketing fees
Capital allowances
Trading income
5b In the year ended 31 December 2019 Knight Ltd expects taxable total profits of £420,000
and is expected to receive the exempt dividends from Sword Ltd of £10,000.
Requirement
Complete all the boxes below and state the first date by which any corporation tax should
be paid in relation to the year ended 31 December 2019. Input the date in the format
DD/MM/YYYY (eg, 03/04/2019 for 3 April 2019).
£
Taxable total profits
Exempt ABGH distributions
Augmented profits

First payment of corporation tax due date

LOs 5b, 5c, 5d

6a Budding Ltd, an unquoted trading company, prepares accounts to 31 March and has no
related 51% group companies. The draft accounting profits for the year ended 31 March
2019 are £165,000. The following items have been added or deducted in arriving at the
draft accounting profit:
Note £
Depreciation 13,200
Bonuses 1 25,000
Qualifying donation 2 10,000
Exempt dividends received 3 6,750
Bank interest receivable 8,000
Notes:
(1) Bonuses totalling £25,000 were paid in respect of this period on 2 February 2020.
These were the first bonuses paid by the company.
(2) The qualifying donation of £10,000 in the accounts comprises £8,300 paid during the
accounting period and an accrual of £1,700 that the company had agreed to pay but
was not paid until 10 June 2019.
(3) Exempt dividends received from unrelated UK companies.

ICAEW 2019 Scenario-based questions: corporation tax 109

 In addition, the following items have not yet been included in the accounts:
 Legal fees in relation to an issue of share capital (£1,750) and in relation to new
employment contracts (£1,800).
 The company made no purchases or disposals of plant during the year ended
31 March 2019 but had a tax written down value on the main pool at 1 April 2018 of
£800.
Requirement
Using the standard format below, compute Budding Ltd's taxable total profits for the year
ended 31 March 2019. You should enter a number in each relevant box. If an amount is not
taxable or no adjustment is required you must enter a zero or a dash into the relevant box.
£
Trading income (W1)
Non-trading loans
Dividends
Qualifying donation
Taxable total profits
W1 – Trading income
£
Draft accounting profits
Depreciation
Bonuses
Qualifying donation
Exempt dividends received
Bank interest receivable
Legal fees
Capital allowances
Trading income
6b Assume that Budding Ltd has taxable total profits of £400,000 and has not received any
dividends in the eight months ended 30 November 2019.
Requirement
You are required to state:
 the profits limit for the eight months ended 30 November 2019, that is used to
determine whether Budding Ltd must pay corporation tax by instalments; and
 the first date by which any corporation tax should be paid in relation to the eight
months ended 30 November 2019. Input the date in the format DD/MM/YYYY (eg,
03/04/2019 for 3 April 2019).
£
The profits limit is

First payment of corporation tax due date

LOs 5b, 5c, 5d

110 Principles of Taxation: Question Bank ICAEW 2019

 7a Pedestal Ltd, an unquoted trading company, prepares accounts to 31 December and has
no related 51% group companies. The draft accounting profits for the six months ended
31 December 2018 are £1,873,000. The following items have been added or deducted in
arriving at the draft accounting profit:
Note £
Depreciation 80,900
HMRC interest payable 1 150
Donation 2 10,000
Client entertaining 6,300
Bank interest receivable 7,200
Notes:
(1) HMRC interest was paid in respect of late corporation tax for the accounting period for
the year ended 30 June 2018.
(2) The donation of £10,000 paid during the accounting period related to a national
registered charity (£8,000) and a political party (£2,000).
In addition, the following items have not yet been included in the accounts:
 The company issued £50,000 of debenture loan stock to fund the launch of a new
product. The interest payable in respect of the loan stock was £2,500 for the six months
ended 31 December 2018, and the company incurred legal fees in respect of the loan
stock issue of £1,300.
 The company purchased machinery during the six months ended 31 December 2018
costing £50,000. The tax written down value on the main pool at 1 July 2018 was
£120,000.
Requirement
Using the standard format below, compute Pedestal Ltd's taxable total profits for the six
months ended 31 December 2018. You should enter a number in each relevant box. If an
amount is not taxable or no adjustment is required you must enter a zero or a dash into the
relevant box.
£
Trading income (W1)
Non-trading loans
Qualifying donation
Taxable total profits
W1 – Trading income
£
Draft accounting profits
Depreciation
HMRC interest payable
Donation
Client entertaining
Bank interest receivable
Loan stock
Capital allowances
Trading income

ICAEW 2019 Scenario-based questions: corporation tax 111

 7b In the year ended 31 December 2019 Pedestal Ltd expects taxable total profits of
£1,940,000 and is expected to receive £6,000 in dividends from unrelated UK companies
and £1,000 from an unrelated USA company.
Requirement
Complete all the boxes below and state the first date by which any corporation tax should
be paid in relation to the year ended 31 December 2019. Input the date in the format
DD/MM/YYYY (eg, 03/04/2019 for 3 April 2019).
£
Taxable total profits
Exempt ABGH distributions
Augmented profits

First payment of corporation tax due date

LOs 5b, 5c, 5d

8a Mayet Ltd, an unquoted trading company, prepares accounts to 30 June and has no related
51% group companies. The draft accounting profits for the year ended 30 June 2018 are
£95,000. The following items have been added or deducted in arriving at the draft
accounting profit:
Note £
Depreciation 4,500
Pension cost 1 10,000
Qualifying donation 2 14,000
Exempt dividends received 3 11,700
Bank interest receivable 13,000
Notes:
(1) £8,000 of pension contribution was paid during the year ended 30 June 2018, with
£2,000 accrued at the year end.
(2) The qualifying donation of £14,000 in the accounts represents an amount paid to a
charity in April 2018. A further £2,000 was paid to another charity in July 2017, but this
amount had been accrued in the accounts of the previous accounting period.
(3) Exempt dividends received from unrelated UK companies.
In addition, the following items have not yet been included in the accounts:
 The company wrote off a debt of £7,000 which related to an amount owing from a
customer.
 The company purchased a new car with emissions of 48 g/km costing £12,300 during
the year ended 30 June 2018. The tax written down value on the main pool at 1 July
2017 was £0.
Requirement
Using the standard format below, compute Mayet Ltd's taxable total profits for the year
ended 30 June 2018. You should enter a number in each relevant box. If an amount is not
taxable or no adjustment is required you must enter a zero or a dash into the relevant box.

112 Principles of Taxation: Question Bank ICAEW 2019

 £
Trading income (W1)
Non-trading loans
Dividends
Qualifying donation
Taxable total profits
W1 – Trading income
£
Draft accounting profits
Depreciation
Pension cost
Qualifying donation
Exempt dividends received
Bank interest receivable
Debt write-offs
Capital allowances
Trading income

8b In the year ended 30 June 2019 Mayet Ltd expects taxable total profits of £100,000 and is
expected to receive exempt dividends of £10,000 from unrelated UK companies and
exempt dividends of £2,000 from an unrelated Icelandic company.
Requirement
Complete all the boxes below and state the first date by which any corporation tax should
be paid in relation to the year ended 30 June 2019. Input the date in the format
DD/MM/YYYY (eg, 03/04/2019 for 3 April 2019).
£
Taxable total profits
Exempt ABGH distributions
Augmented profits

First payment of corporation tax due date

LOs 5b, 5c, 5d

9a Fonic Ltd, an unquoted trading company, prepares accounts to 30 September and has one
wholly owned subsidiary. The draft accounting profits for the year ended 30 September
2018 are £852,000. The following items have been added or deducted in arriving at the
draft accounting profit:
Note £
Depreciation 130,600
Profit on disposal 1 2,000
Property income 2 16,500
Exempt dividends received 3 10,800
Bank interest receivable 4,900
Entertaining 4 6,000

ICAEW 2019 Scenario-based questions: corporation tax 113

 Notes:
(1) The profit was on disposal of a pool car (see below).
(2) Property income relates to rental of land next to the Fonic Ltd's factory. The rent
received from 1 October 2017 to 31 August 2018 was £16,500, with a further £1,500
for the month of September 2018 outstanding as at 30 September 2018.
(3) Exempt dividends received from unrelated UK companies.
(4) Entertaining costs relate to a staff Christmas party costing £2,000 (£200 per employee)
and client lunches totalling £4,000 (average cost per client £80).
In addition, the following item has not yet been included in the accounts:
 The company has not calculated any capital allowances for the accounting period. The
only capital transaction was the disposal of the pool car. The proceeds on disposal of
the car were £5,000 and the tax written down value on the main pool at 1 October
2017 was £1,500.
Requirement
Using the standard format below, compute Fonic Ltd's taxable total profits for the year
ended 30 September 2018. You should enter a number in each relevant box. If an amount
is not taxable or no adjustment is required you must enter a zero or a dash into the relevant
box.
£
Trading income (W1)
Non-trading loans
Dividends
Property income
Taxable total profits
W1 – Trading income
£
Draft accounting profits
Depreciation
Profit on disposal
Property income
Exempt dividends received
Bank interest receivable
Entertaining
Capital allowances
Trading income

114 Principles of Taxation: Question Bank ICAEW 2019

 9b Assume that Fonic Ltd has taxable total profits of £600,000 and has not received any
dividends in the year ended 30 September 2019.
Requirement
You are required to state:
 the profits limit for the year ended 30 September 2019, that is used to determine
whether Fonic Ltd must pay corporation tax by instalments; and
 the first date by which any corporation tax should be paid in relation to the year ended
30 September 2019. Input the date in the format DD/MM/YYYY (eg, 03/04/2019 for
3 April 2019).
£
The profits limit is

First payment of corporation tax due date

LOs 5b, 5c, 5d

10a Selby Ltd, an unquoted trading company, prepares accounts to 31 December and has one
wholly owned subsidiary. The draft accounting profits for the year ended 31 December
2018 are £534,000. The following items have been added or deducted in arriving at the
draft accounting profit:
Note £
Depreciation 46,200
Loan interest payable 1 750
Qualifying donation 2 2,000
Pension contributions 3 56,000
Bank interest receivable 6,000
Notes.
(1) Interest payable on a loan to buy machinery.
(2) The qualifying donation of £2,000 in the accounts comprises £1,800 paid during the
accounting period and an accrual of £200 that the company had agreed to pay but was
not paid until 15 January 2019.
(3) The pension contributions of £56,000 comprise £34,000 paid by the company during
the year and an additional £22,000 accrued at the year end.
In addition, the following items have not yet been included in the accounts:
 The company purchased machinery (costing £175,600) during the year ended
31 December 2018. The tax written down value on the main pool at 1 January 2018
was £75,000.
 Professional fees consisting of debt collection fees of £300 and a bank arrangement
fee of £280 regarding the loan to buy the machinery.
Requirement
Using the standard format below, compute Selby Ltd's taxable total profits for the year
ended 31 December 2018. You should enter a number in each relevant box. If an amount is
not taxable or no adjustment is required you must enter a zero or a dash into the relevant
box.

ICAEW 2019 Scenario-based questions: corporation tax 115

 £
Trading income (W1)
Non-trading loans
Qualifying donation
Taxable total profits
W1 – Trading income
£
Draft accounting profits
Depreciation
Loan interest payable
Qualifying donation
Pension contributions
Bank interest receivable
Professional fees
Capital allowances
Trading income

10b In the year ended 31 December 2019 Selby Ltd expects taxable total profits of £480,000
and is expected to receive no dividends.
Requirement
Complete all the boxes below and state the first date by which any corporation tax should
be paid in relation to the year ended 31 December 2019. Input the date in the format
DD/MM/YYYY (eg, 03/04/2019 for 3 April 2019).
£
Taxable total profits
Exempt ABGH distributions
Augmented profits

First payment of corporation tax due date

LOs 5b, 5c, 5d

116 Principles of Taxation: Question Bank ICAEW 2019

Answer Bank
118 Principles of Taxation ICAEW 2019