This article is relevant to those of you sitting the TX-UK exam in the period 1 June 2022 to 31 March 2023, and is based on tax legislation as it applies to the tax year 2021–22 (Finance Act 2021).
Where a question requires the adjustment of profits, the following will generally be included as a note to the requirements:
- Which figure to use to start the computation (normally the net profit figure for an unincorporated business, or the profit before taxation figure for a limited company).
- If you should list ALL of the items referred to in the scenario and notes to the question, indicating by the use of zero (0) any items which do not require adjustment.
This approach has been adopted so that candidates maximise available time, and to help them score full marks.
Three extracts from examples of exam questions requiring adjustment of profits are shown below to demonstrate how different questions should be approached. The first two are for a limited company and the third is for a sole trader.
The first example relates to a company with a short period of account of less than 12 months.