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  • Tax Memo - Corporation tax - Chargeable profits - Specific income and expense items - Expense items - Impairment losses - 3540
    To be deductible an impairment loss (also known as a bad debt) must be incurred in the course of the business. This means that an irrecoverable trading debt will be deductible, whereas an irrecoverable loan to a member of staff will not, unless the trade in question is one of making loans. A general bad debt provision (for example, a fixed percentage of all outstanding debts) is not deductible. However, where individual debts have been specifically reviewed and a decision taken as to the likelihood of them...
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  • Tax Memo - Corporation tax - Other income and expenses - Intangible assets - Corporation tax code - 7440
    The regime is, in practice, fairly straightforward as certain debits (expenses), credits (income) and gains recognised in the company accounts for qualifying intangible assets are also allowed for tax purposes. The main distinction is whether they arise on trading or non-trading items, as follows: - trading items: credits and debits arising on assets held for the purposes of the trade are taxed as trading income (or as property income if the trade is a property business); and - non-trading items: - credits...
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  • Tax Memo - Corporation tax - Other income and expenses - Loan relationships - Special situations - Impairment losses (bad debts) - 7935
    Where a company prepares its accounts in accordance with an acceptable accounting method (ΒΆ7835), it is required to assess its financial assets at each balance sheet date and to see whether there is objective evidence that an asset or group of assets can be said to be impaired. Any profit or loss so arising as a result is recognised in the company's profit and loss account. Impairment losses, under these provisions, are not restricted to cases where the creditor feels default is probable (or has in fact occurred),...
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