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

[suzy walker]

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

 

[Ian J]

Why doesn’t Corp tax take into account all expenses? Or is this just life?!

It does.

Corporation Tax is paid on profits which is derived from sales less cost of goods plus expenses and admin costs etc

 

[Scalloway]

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.

 

[billmccallum1957]

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.

 

[duggimon]

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.

 

[LiveNetworks Ltd]

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.