StudentShare solutions
Triangle menu

Business taxation - Essay Example

Nobody downloaded yet

Extract of sample
Business taxation

Understanding Revenue and Capital Expenditures Revenue expenditures such as rent of premises for conducting business, employee wages, raw materials and many such items are ongoing expenditures that are necessary to generate business profits. Revenue expenditure is also known as circulating capital that means capital changes hands to produce profit and loss. On the other hand, capital expenditures such as purchasing land or building, plant and machinery or goodwill form a long-term expenditure that accrue benefits until its useful life. The Statute ICTA88/S74 (1) (a) provides that only those expenditures are allowed for deductions that are "incurred wholly and exclusively for the purpose of trade" (BIM37035). However, capital expenditures are not allowed for deductions fully, and its treatment is governed by different statutes, as incorporated by the governing office from time to time. Capital Expenditures – Differential Treatment in GAAP and Income Tax It is important to note that accountancy and income tax laws are not fully in alignment as far as treatment of capital expenditure is concerned. ...
All revenue expenditures are allowed for deduction to profit and loss statement. All capital expenditures are not allowed for deductions unless allowed by statute. For example, ITTOIA/S58 and S59 are the statues that allow deductions for the incidental costs incurred while raising a loan for business purposes (BIM45800, 2012). The statutes deal with the costs incurred while raising loans or issuing loan stock. These statutes do not provide relief for the costs incurred while raising finance through other methods such as bills of exchange, leasing assets, hire purchase, buying assets on credit or any form of equity financing. The incidental costs to obtain finance have been defined in ITTOIA/S58 (2). The allowable costs include commissions, fees, advertising, printing and related matters. It is required that the costs must be incurred, wholly and exclusively, for the purpose of acquiring or repaying the finance including its security. Some of the costs that are included under this statute can be described as per the following (BIM45815). a. Introduction fees, underwriting commissions, brokerage. b. Professional and legal expenses for negotiating the loan and getting the document ready. c. Valuer's fees, land registry fees incurred towards the security of the loan. d. Commitment fees. e. The costs of issuing a prospectus, postage, and the costs of advertising etc (BIM45815). Statute ITTOIA/S59 (1) provides that expenditure incurred while obtaining loan is not allowed for any deduction if it has provisions of conversion into shares or if any other securities or conversion takes place before three years from the date of loan obtaining (BIM45810). There are several deductions ...Show more


Business Taxation Capital and revenue expenditure divide has been a major topic of discussion among business people, tax advisors, and judges for quite a long time. There is no simple test that can help decide on the issue in all the circumstances. At times, various judicial judgments lead to conflicting conclusions, too…
Author : avafeeney
Business taxation essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Business taxation"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

Business Taxation: Zing Zang Zong Case Study
After making loss of $40,000 in the fiscal year that ended on 31 March 2011, the business entity was able to record improvement profitability within the fiscal year ending 31 March 2012. From the projections and forecasts of sales and profitability, there is evidence that the firm is likely to pay more tax of either 40% or 50%.
9 pages (2250 words) Essay
Law of Business Taxation
This paper will discuss the statement "It is invariably the case that it is easier for a taxpayer to deduct expenses under the ITTOIA 2005 than under the ITEPA 2003" citing cases decided by court. Under ITEPA 2003, Schedule 12 to FA 2002 enhances the relief provided to companies in order to qualify revenue expenditure on research and development.
5 pages (1250 words) Essay
Taxation Impacts on International Business
The amounts generated from taxations of various products or services are channeled to the national treasury then used to meet governmental or national expenses like paying the civil servants, establishing national projects, and procuring national defense facilities among others.
3 pages (750 words) Essay
Business Taxation
Higher spending champions have advocated for higher spending where position of promoting ear-marked taxes for specific, highly favoured services, as the outline budget plan of 2002 that was geared towards financing the cost of improvements in the highly valued NHS through increased National Insurance Contributions.
10 pages (2500 words) Essay
Business Taxation
The primary objective of the group loss relief is to make a group of companies perform variety of activities so that it can achieve the tax treatment as if a single entity is performing all those activities. The
2 pages (500 words) Essay
Business Taxation. See uploaded guidlines
Research and development tax credits is a scheme available to all firms based in UK (in USA also there is a similar scheme). In accordance with the official website of HM Revenue and Customs (2008)
6 pages (1500 words) Essay
Business Taxation
he tools of tax evasion are basically that the reporting of assets or earnings is deliberately lesser than the actual value, this implies that they would have to pay a lesser tax because taxes are usually in percentage terms. Tax avoidance refers to the term when the tax regime
2 pages (500 words) Essay
BUSINESS TAXATION ( Uinted KingdomTAX System )
Direct taxation occurs on charges of income from individuals or corporate, profits earned in business or other gains, these forms of taxation is deducted at the source or paid directly to the authorities. Indirect taxes are charged on the goods
9 pages (2250 words) Essay
Small business taxation
The dilemma of how to treat these two different persons in terms of taxation arises because in the small business sector some activities of self employed people may be economically similar to those of the
11 pages (2750 words) Essay
Business Taxation
The businesses charge the normal standard rate for their goods and services, but they do remit whole of it to the HM Revenue and Customs. Instead, a business remits the revenue at a lower rate based on the type of business run and its sector. The
5 pages (1250 words) Essay
Hire a pro to write
a paper under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
Comments (0)
Click to create a comment
Contact Us