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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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I run a construction company. last year I paid £28,000 in corporation

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I run a construction company. last year I paid £28,000 in corporation tax. I was very unhappy about this as I had intended and advised my accountant at the time that any surplus from my client based construction projects were to be used to make a land or property purchase to ensure that I could move away from Client based contracts that are very high risk and not profitable.
I was advised and fact made to make the tax payment as the accountant would not accept my request that the capital was needed for land or property purchase in the future. With his fees and the tax paid I do not have nearly enough to buy anywhere and will have to go back to Client based contracts. How can I progress in the future and is the Accountant right about the tax liability when it could have been shown as land purchase liability?
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.

Hello, I am Keith and ready to assist you with your problems. I regret that I have little good news for you. Your accountant would appear to be correct in his advice and his refusal. Capital is needed and someone must provide it. It is regrettably a common misconception that capital investment in a project attracts tax relief. This is not generally the case. For say plant and machinery capital allowances may kick in to reduce liabilities, but that is not always the case. Let us say in a year the cost of running a contract gives a loss as opposed to a profit then that loss could be carried back to the prior year and some or all of the tax paid might be reclaimed. Someone somewhere will have to come up with the moneys to fund the contract(s). I hope this answer has been of some help to you. Please do not hesitate to come back to me using the Reply Tab below if you seek further information.

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