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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4978
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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there, I have a liability provision that I need to enter

Resolved Question:

there, I have a liability provision that I need to enter on my CT600 form to return to HMRC.
The money is kept aside as it will eventually be paid back to our customers when they request it.
How do I show this on my return?
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
and welcome to the site. Thank you question.

Please provide me with some background information and I will advise appropriate entry.

Where is the money sitting in the accounts at present?
What is the provision for?

Many thanks
Customer: replied 2 years ago.

there,

Sorry yes I did not explain myself very well.

I have a small business at the moment and this is my first return.

I have a website were users can upload videos and charge other users to view them.

The users who upload the content can then request payment from the site, we deduct a fee and send them the remainder.

To keep track on what is owed to users another bank account was set up within the accounts, and we adjust this amount monthly so we know what is owed out.

I was informed to put this as a provision within my accounts as the amount to be paid out is know, but we don't know when it will be due (it depends on when the users requests payout).

I hope this makes things a bit clearer?

Expert:  taxadvisor.uk replied 2 years ago.
Sean, thank you reply and information.

You should show monies due to the users as creditors due within one year in Box AC58.
The equivalent sum would be in the dedicated bank account within cash at bank and in hand Box AC54, as explained by you.

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.

Customer: replied 2 years ago.

there,

Thank you .

I can see this field in the Accounts section of the CT600, but it's not in the Computations or CT600 sections.

Expert:  taxadvisor.uk replied 2 years ago.
Sean, you won't see this in the computations section as you don't see every entry in the accounts section adjusted in the computations section.
The computations sections covers any adjustments to profit and loss entries in the accounts section that are not allowable purposes.

I presume you made specific provison likely to be repaid to users and only brought in the income section the amount that does not become repayable at a future date.

I hope this is helpful.
taxadvisor.uk and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Thank you, ***** ***** I understood enough of this to do myself, but the jargon gets to me sometimes!

Expert:  taxadvisor.uk replied 2 years ago.
Sean, good luck with the rest of the return.

Best wishes

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