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Investment companies |
See Also
Adjustment of profit | Long periods of account | UK property income
Select from the following:
Overview | The
'A' schedules | The 'D' schedules
| Long periods of account | Balance
sheet items
The preparation of computations for investment companies using the software is similar to the procedures described in other sections. There are, however, certain differences in the formats of the 'A' schedules and 'D' schedules.
A schedule
The format of the A schedule for investment companies differs from that for trading companies in that there is no adjustment to profit. Instead, the various schedules of income (including trading income) are computed elsewhere, and the taxable amount brought to the A schedule.
Property expenses
Allowable property expenses are deducted from UK property income (CTA2009 s1219(1) and are not classified as expenses of management.
Expenses of management
Allowable expenses of management are deducted from total income; these include for example commissions, redundancy payments, plant and machinery capital allowances to the extent the assets are used for a business purpose and the allowances are not deductible from any other class of income.
If there are any surplus management expenses brought forward from previous periods these are deducted from the total, leaving either profits chargeable to corporation tax or surplus expenses to be carried forward.
Capital allowances
Relief for capital allowances on plant and machinery or cars is assumed to be entirely expenses of management. Where there is relevant trading income, the user must manually adjust the capital allowances if they are to be set against trading income.
Losses schedule
The Losses schedule for investment companies is similar to that for trading companies except that management expenses are brought and carried forward instead of trading losses. The schedule has additional columns for surplus capital allowances, UK property business losses and any trading loss.
D schedule
The format of the D schedule is the same for investment companies as for trading companies, however since the trading company "adjustment of profit" is not generally required or applicable to an investment company, the profit before tax is not automatically transferred from the Profit and loss account to the A schedule.
If there is trading income, it must be entered directly onto the 'A' schedule or onto a user-generated computations schedule or working paper developed from the 'D' schedule which must then be manually referenced to the 'A' schedule.
Expense analysis schedules
The analyses for the 'D' schedules are prepared in the same way as for trading companies except that it will be necessary to input allowable expenses of management in the right hand column instead of disallowable expenses as in the case of trading companies. For pre FY 2000 computations there is an additional column for allowable property expenses which will be deductible from any UK property income; for FY 2000 computations and subsequent periods, any UK property income and expenditure is linked through to the UK property income schedule in the usual way.
If the investment company has a long period of account, i.e. greater than 12 months, the procedure is exactly the same except that the total allowable expenses of management will be time apportioned. For further information please refer to long periods of account.
Where items of expenditure are not included in the profit and loss account, such as investments in subsidiaries and other capital costs of acquisition or disposal, it will be necessary to set up blank schedules so that any allowable costs can be adjusted for.