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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4803
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Hi...filling in my 1st CT return. AC14...does this include

Resolved Question:

Hi...filling in my 1st CT return. AC14...does this include my costs of producing sales...I publish computer games, so these costs are principally payments to computer programmers, graphic designers and for off-the-shelf code packages ( i.e. ready written computer game code)
Thank you
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site.
Thank you for requesting I answer your question.

As your finished product is publication of computer games and all costs indentified by you in your question appear to be direct costs, then you are right to include them in Box AC14 (cost of sales).

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Expert:  taxadvisor.uk replied 2 years ago.
Hi Simon,

I notice you have viewed my answer to your question about classification of expenses/costs when completing CT600 return (JACUSTOMER-3b6fei3z- Last Viewed on 12/12/2014 at 5:35 PM).

Just checking to see if you have any issues relating to your question that I may not have addressed.


Please let me know if I can be of further assistance.

Customer: replied 2 years ago.

Hi! Yes all good but I will for sure have more questions very shortly...maybe tomorrow when I resume. Thanks vm

Expert:  taxadvisor.uk replied 2 years ago.
Simon, thank you for the update.

I await further news from you.

Many thanks
Customer: replied 2 years ago.

Hi... I'm nearly there on the cost of sales. This business required investment in an apple computer to create the games ready to upload to Apple. Is this in COS or another section. Also I purchased special software which helps code up games... and needed to attend a seminar and instruction course in San Diego to learn how to use it (all verifiable) Can I offset the cost of the computer and that course/software (including flight/basic hotel?

Expert:  taxadvisor.uk replied 2 years ago.
Simon, thank you for your reply.

I would be inclined to treat the cost of an apple computer as capital and show it as a tangible asset.

The cost of software can be treated as cost of sales.
Costs associated with attending a seminar and instruction course(including flights and hotel) - I would include these as administrative costs in Box AC20

I hope this is helpful.
Customer: replied 2 years ago.

Does that mean that the computer and the admin costs will mitigate my tax liability or will they just display as balance sheet items?

Expert:  taxadvisor.uk replied 2 years ago.
Simon, thank you for your reply.

Admin costs are allowable costs but fall below gross profit and above profit for the year. They mitigate tax liability.

Computer is a balalnce sheet item but you will be entitled to capital allowance for this expense and you mitigate your tax liability through claiming capital allowance.

I hope this helps and answers your question.

If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to ensure I get credited for it.

taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4803
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
taxadvisor.uk and other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer.

Best wishes.
Customer: replied 2 years ago.

Hi...I'm having an issue reconciling my P&L wight he Balance sheet. So, in essence I have

AC16 8695 (gross profit)

AC20 1932 (admin expense)

AC36 6763 (profit)..AC40 i s the same

AC44 6763 tangible assets (not depreciated..valued at cost)

AC56 1164 cash in hand/bank

AC68 7927 Total net assets

AC70 1 Called up share cap ( 1nominal value)

AC74 6763 P&L

ERROR MESSAGE BALANCE SHEET DOEs NOT TALLY. I have just £1 share established when the LTD was formed. What am I missing here please? Any thoughts?

Expert:  taxadvisor.uk replied 2 years ago.
Simon, thank you for your reply.

This is a new question and I am happy to help you but this would be as additional service.
Please let me know if you wish to proceed.

Many thanks
Customer: replied 2 years ago.

Yes please.... I have submitted payment for you to continue. Cheers Simon

Expert:  taxadvisor.uk replied 2 years ago.
Simon, thank you for your reply.

Please clarify for me ...

There is a difference of £1,163 between Box Ac68 and AC80. they should be the same.

The value of tangible assets is the same as the profit for the year..is this a coincidence.
Did you spend any money of your own that was not paid back to you by the year end?

I await further news.

Many thanks.
Customer: replied 2 years ago.

Possibly a typo! I will check when I get back to my pc. I'm just travelling back from Manchester.

Simon

Expert:  taxadvisor.uk replied 2 years ago.
Simon, thank you fo ryour reply..

Have a safe journey.

Many thanks
Customer: replied 2 years ago.

AC16 8695 (gross profit)

AC20 1932 (admin expense)

AC36 6763 (profit)..AC40 is the same

AC44 2693 tangible assets (not depreciated..Computer valued at cost..is this ok????)

AC56 1164 cash in hand/bank

AC68 3857 Total net assets

AC70 1 Called up share cap ( 1nominal value)

AC74 3857 P&L

AC80 3858

Yes, it was a typo. I have revised the figures. I still can not get AC68 to balance with AC80. The called up share capital can not be zero BUT the nominal £1 share issued when the company was formed is not paid for...I did not buy it or otherwise trade/issue shares. So I still have this issue!

Expert:  taxadvisor.uk replied 2 years ago.

Simon, thank you for your reply....

Here is a practical solution... just treat the shares as called up and increase your cash balance by 1 .. box AC54 to read 1165. Then both AC68 and AC80 would read 3,858.

When you file your annual return to Companies House, show 1 share as issued share capital.

It is common to have called up share capital albeit £1. This will solve your problem too.

I hope this is helpful.

Customer: replied 2 years ago.

New question! Treatment of computer... I have included this as a tangible asset, with zero depreciation through that year. Is that ok and in the profit and loss how do i strip it our of COS as a capital allowance?

Expert:  taxadvisor.uk replied 2 years ago.
Simon, you would claim capital allowance when you complete Computations section of CT 600 return.

It is a tax account entry and not financial accounts entry.

In CT computation you would reduce your profit chargeable to CT by the capital allowance.

I hope this helps.
Customer: replied 2 years ago.

Ok understood, many thanks. Next question! I am in "Current Year profit and loss account. Profit is shown in AC185 as 6763. Reserves are zero , equity divs are zero. AC187 shows 6763, Retained profit. Looks fine...BUT I get the error message that this should tally with the balance sheet. I am again £1 out. Very confused. can you advise?

Expert:  taxadvisor.uk replied 2 years ago.
Can you please send me snap shots of your profit and loss account and balance sheet.

I am now lost with your accounts...

I thought you told me AC74 is 3,857 and that you were out by 1 in your balance sheet.
This being your first year of reporting all three should be the same
AC40=AC74=AC187...

How did you arrive at 3,857 for AC74 when AC40 is 6763?

Many thanks
Customer: replied 2 years ago.

Hi! Sorry to confuse you! I'll send snapshots when I get back to my PC later this afternoon. Sorry for the delay. Simon

Customer: replied 2 years ago.

Hi, apologies for this delay, I have been unwell. All fine now! I managed to get this all to balance. I had made some typos in my responses, all now rectified. It has just occurred to me however... the cost of sales...I met these personally as all designers/coders etc were hired via an agency that required a credit card...my new company did not have one so I just charged my own card and reimbursed myself periodically. Do I need to enter this in the balance sheet or do I add this to the notes to the accounts somewhere Thanks in advance. Simon

Expert:  taxadvisor.uk replied 2 years ago.

Simon, thank you for your reply.

As far as cost of sales payments made from personal credit card are concerned, your double entry should be
DR - cost of sales (total of all payments)
CR - Director's account in the balance sheet (within creditors)

When you repay yourself on adhoc basis, your double entry should be
DR - Director's account in the balance sheet
CR - Bank account (payments)

You would have recorded all costs as and when made and the director's account cleared by adhoc repayments.

There is no requirement of a note to the accounts.

I hope you are feeling better now.

Wishing you a Happy New Year.

Many thanks

Customer: replied 2 years ago.

Thanks a lot...but to be clear >>>>

"As far as cost of sales payments made from personal credit card are concerned, your double entry should be
DR - cost of sales (total of all payments) >>> AC14 yes?
CR - Director's account in the balance sheet (within creditors) AC64 ?????

When you repay yourself on adhoc basis, your double entry should be
DR - Director's account in the balance sheet AC50 ???
CR - Bank account (payments) >>> i have the bank statements but where do i make this entry ??

Expert:  taxadvisor.uk replied 2 years ago.
Simon, thanks for your reply

"As far as cost of sales payments made from personal credit card are concerned, your double entry should be
DR - cost of sales (total of all payments) >>> AC14 - correct
CR - Director's account in the balance sheet (within creditors) AC58

When you repay yourself on adhoc basis, your double entry should be
DR - Director's account in the balance sheet AC58
CR - Bank account (payments) >>> i have the bank statements but where do i make this entry ?? AC54

In due course once you have fully repaid yourself AC58 would read zero ...

If you are writing a cash book, then all payments to yourself to cover purchases on personal credit card should be analysed to AC58

Many thanks

Customer: replied 2 years ago.

Thank you very much. I will undoubtedly have more for you which may mean paying for the next question, which I am happy to do. How do I process that whilst retaining you rather than another expert? I am currently looking at accounting policies, so that is a minefield. Actually the CT600 pdf has stopped me proceeding from "Tangible assets Toatl" in the accounting policy section.. not surge what i have done wrong here..

Expert:  taxadvisor.uk replied 2 years ago.
Simon, thank you for your reply.

When you submit your new question, request that it is answered byCustomer
Also refer to me in the body of your question... Hopefully other experts will leave it alone for me.

You can send me a copy of the page within accounts that states Statutory Accounting notes to consider tangible fixed assets.

Many thanks
Customer: replied 2 years ago.

ok..actually, referring to your previous answer, I'm not sure what you mean >> CR - Director's account in the balance sheet (within creditors) AC58

When you repay yourself on adhoc basis, your double entry should be
DR - Director's account in the balance sheet AC58

how can I make different entries to the same field?

Expert:  taxadvisor.uk replied 2 years ago.
Your entry in the field AC58 will be one, made up of various transactions as follows:

Payments made by you will be -entries (add up all payments made by you and make a note of it and lets say they come to £3,600)

Payments made to you by the company will be +entries (add up all payments made to you and make a note of it and lets say they come to £3,200)

In box AC58 the figure will be -400 (3,600 paid by you less 3,200 repaid to you)

I hope this is helpful
Customer: replied 2 years ago.

Ha! My brain is missing! Ok fully understood. I will ask th next question tomorrow afternoon..it relates to the accounting policies. Thanks again. Simon

Expert:  taxadvisor.uk replied 2 years ago.
good... maybe you will become an accountant!!!

Wishing you a happy new year.
Customer: replied 2 years ago.

one last thing....ac58 can not have a negative number..correct? so if i have taken 6404 pounds net to my personal account (payments to me less payments by me) how is this reflected? in ac58 or elsewhere?

Expert:  taxadvisor.uk replied 2 years ago.
Simon, any overpayment to you would have to be reclassified and treated as
salary and/or dividends paid.

You have stated you have profits of 6,763.. you will have to reduce these to reflect dividends.

Remember dividends are paid out of taxed profits, so maximum dividends are (6,763 less CT provision of 20%)

Many thanks

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