Faisal Limited, which is a company owned by three friends has been trading for many years, preparing its accounts to 31 March each year. Financially, the company had done well in those many years. The company had attended to its tax affairs diligently, filing returns and paying taxes on time. In April 2020, a decision was made to change the year end from 31 March to 31 December. You are a tax adviser to Faisal Limited and you are preparing for a meeting with the Finance Director of Faisal. At this meeting you will deal with three matters thus:

(1) You will discuss company loss relief and how that is dealt with

(2) You will discuss the draft of a letter you are planning to send to HMRC in connection with the loss relief claim that you believe Faisal should make in light of their current loss situation

(3) You will discuss the total taxable profits for each of the three periods that for which computations have to be made.

Faisal Limited has the following results.

	Year ended 31.3.2020	9 months to 31.12.2020	Year ended 31.12.2021
	£	£	£
Trading profit (loss)	18,600	12,960	(300,000)
Bank deposit interest accrued	240	720	780
Rents receivable	4,260	4,320	4,800
Chargeable gain	0	23,040	0
Qualifying charitable donations	0	3,000	4,500

Required:

In preparation for the meeting:

(a) Compute all taxable total profits, claiming loss reliefs as early as possible. State the amounts of losses carried forward as at 31 December 2021. (1.5 Marks)

(b) Draft a note on company loss reliefs, specifically as they affect Faisal Limited (0.5 Marks)

(c) Draft the letter to HMRC in connection with the loss relief claim that you believe Faisal should make in light of its current loss situation (1.0 Marks)

Answer rating: 100% (QA)

Compute all taxable total profits claiming loss reliefs as early as possible State the amounts of lo... View the full answer