Test your understanding
(1). State whether the following statements are true or false in respect of a trader commencing a new unincorporated business.
A Expenditure incurred in the seven years prior to the commencement of trade is treated as having been incurred in the first tax year of trading.
B Capital allowances are given in respect of the cost of assets purchased for use in the business prior to the commencement of trading.
(2). A new business began trading on 1 July 2013 and will prepare accounts for the 15-month period ending 30 September 2014. Initially it rented the machinery it required but on 1 September 2014 it purchased machinery for £120,000.
What are the capital allowances for the 15 month period if the business is:
(i) unincorporated, or
(ii) a company?