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Corp tax... again.... sorry!

Discussion in 'Accounts & Finance' started by suzy walker, Feb 6, 2018.

  1. suzy walker

    suzy walker UKBF Newcomer Free Member

    14 0
    is Corp tax devised by using a cost of goods figure?

    Example, you have a showroom full of cars that have been there for years worth 50k (they’re samples, not for sale, just there so you can order a new one off the back of it).

    You purchased new cars in this tax of 10k.
    Turnover was 100k
    Cogs was 50k

    Is this at the stage where Corp tax is devised?


    What if your other expenses...rent, rates, staff where 100k and the company made a loss? Why doesn’t Corp tax take into account all expenses? Or is this just life?!

    Thanks so much
    S
     
    Posted: Feb 6, 2018 By: suzy walker Member since: Aug 7, 2015
    #1
  2. Ian J

    Ian J Factoring Specialist Full Member - Verified Business

    4,489 1,263
    It does.

    Corporation Tax is paid on profits which is derived from sales less cost of goods plus expenses and admin costs etc
     
    Posted: Feb 6, 2018 By: Ian J Member since: Nov 6, 2004
    #2
  3. Scalloway

    Scalloway UKBF Legend Free Member

    13,101 2,826
    If the cars are not sold at the end of the year they go to stock. If they are sold the following year their stock value will be added to cost of goods sold.
     
    Posted: Feb 6, 2018 By: Scalloway Member since: Jun 6, 2010
    #3
  4. billmccallum1957

    billmccallum1957 UKBF Ace Full Member

    1,751 376
    If you are running a standard P&L a/c on a monthly basis, you would have:

    Total Sales less Direct Costs = Gross Profit

    Gross profit less running costs = Net Profit

    Net Profit is what CT is based, so net profit x .19 would give you the figure.
     
    Posted: Feb 6, 2018 By: billmccallum1957 Member since: Feb 11, 2016
    #4
  5. duggimon

    duggimon UKBF Contributor Free Member

    62 12
    I don't know where you've got the idea Corporation Tax is based on gross profit but it is not. In your example where the income less the purchases less the expenses results in a loss there is no tax to pay.
     
    Posted: Feb 7, 2018 By: duggimon Member since: Oct 27, 2017
    #5
  6. LiveNetworks Ltd

    LiveNetworks Ltd UKBF Regular Free Member

    142 33
    Just a note, the 50K of sample cars that are not for sale should not be classed as stock, stock is something that is there to sell. I'd be putting them in fixed assets.
     
    Posted: Feb 8, 2018 By: LiveNetworks Ltd Member since: Jan 31, 2018
    #6