ACCA · Question 32 · Corporation Tax Liabilities

Section C: Constructed Response

Quantum Bio-Solutions Ltd is a UK resident company specializing in bio-tech manufacturing. The company prepares accounts to 31 March each year. For the year ended 31 March 2024, the draft statement of profit or loss shows a net profit before tax of £850,000.

The following items have been included in arriving at the net profit of £850,000:

1. Depreciation of £120,000.
2. Entertaining clients: £15,000.
3. Entertaining staff (annual Christmas party, cost £120 per head): £6,000.
4. Legal fees for the acquisition of a new freehold factory: £8,500.
5. Qualifying charitable donations: £10,000.
6. Property rental income: £25,000 (This is the net amount received. Gross rent was £30,000, and £5,000 of allowable property expenses were deducted in the accounts).

Capital Allowances Information:

• The tax written down value of the main pool at 1 April 2023 was £45,000.
• On 10 May 2023, the company purchased new lab equipment for £150,000.
• On 15 August 2023, the company purchased a second-hand delivery van for £18,000.
• On 1 November 2023, the company completed the construction of a new factory building at a cost of £600,000 (excluding land). It was brought into use on the same day.

Required:
Calculate Quantum Bio-Solutions Ltd's Corporation Tax liability for the year ended 31 March 2024.

Show all workings, including the adjustment of trading profits, calculation of capital allowances (including Structures and Buildings Allowance), and the final tax calculation.