1. 1. Advise Leicester Ltd on how it can reduce its corporation tax liability by claiming rollover relief, outlining the conditions that apply, any time limits that should be adhered to, and the consequences of making a claim.

Leicester Ltd received interest on £15,000 12% Treasury stock 2025. The interest is paid six-monthly on 31 December and 30 June each year.

Property income receivable for the 16 month period was £24,800 and accrued evenly over the period.

On 18 September 2019 Leicester Ltd disposed of a storage building for £283,000. It had purchased the storage building on 6 April 1992 for £56,000, and on 17 March 2008 spent £42,400 extending the building to create more storage room.

Legal and professional fees of £2,670 were paid in relation to the purchase and legal and professional fees of £4,950 were paid in relation to the sale.

Leicester Ltd had always used the storage building for the purposes of its trade.

A donation of £2,175 was made on 31 October 2018 to the National Trust, a registered UK charity.

At 1 June 2018 Leicester Ltd had £60,675 trading losses brought forward, and unused capital losses of £2,920.

Leicester Ltd has not received any dividends and is not part of a group of companies.

 

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2. Leicester Ltd is an unquoted trading company that was incorporated in the UK in 1990. The company has always prepared its accounts to 31 May each year, but has decided to change its accounting date to 30 September. It has calculated its adjusted trading profit before capital allowances for the 16 month period to 30 September 2019 to be £1,538,640. On 1 June 2018 the tax written down values for plant and machinery were: Final Main pool Special rate pool In the 16 month period ended 30 September 2019. Leicester Ltd purchased: 7 June 2018 £ 85,065 21,260 3 August 2018 14 December 2018 24 June 2019 Purchased machinery for the factory (including £9,900 on alterations needed to the factory to install the machinery) Secondhand motor car for the sales director (CO₂ emissions 117 g/km, 40% private use) Sold office furniture (original cost £5,900) Purchased a lorry (CO2 emissions of 127 g/km, no private use) Purchased machinery for the factory 30 July 2019 15 September 2019 New motor car for the factory manager (CO₂ emissions 47 g/km, 35% private use) Dan £ 121,500 20, 100 4,970 63,250 272,000 8,100 2. Leicester Ltd is an unquoted trading company that was incorporated in the UK in 1990. The company has always prepared its accounts to 31 May each year, but has decided to change its accounting date to 30 September. It has calculated its adjusted trading profit before capital allowances for the 16 month period to 30 September 2019 to be £1,538,640. On 1 June 2018 the tax written down values for plant and machinery were: Final Main pool Special rate pool In the 16 month period ended 30 September 2019. Leicester Ltd purchased: 7 June 2018 £ 85,065 21,260 3 August 2018 14 December 2018 24 June 2019 Purchased machinery for the factory (including £9,900 on alterations needed to the factory to install the machinery) Secondhand motor car for the sales director (CO₂ emissions 117 g/km, 40% private use) Sold office furniture (original cost £5,900) Purchased a lorry (CO2 emissions of 127 g/km, no private use) Purchased machinery for the factory 30 July 2019 15 September 2019 New motor car for the factory manager (CO₂ emissions 47 g/km, 35% private use) Dan £ 121,500 20, 100 4,970 63,250 272,000 8,100

Answer rating: 100% (QA)

SOLUTION AND ANSWERS a i The chargeable gain arising on the disposal of the storage building on 18 September 2019 is calculated as follows Proceeds from sale of storage building 283000 Less Cost of ac... View the full answer