Section A

'Zephyr Winds Ltd', a wind farm operator, prepared accounts for the 15-month period from 1 January 2023 to 31 March 2024.

How will this long period of account be split for Corporation Tax purposes?

Answer options:

A 12-month period to 31 December 2023 and a 3-month period to 31 March 2024.

A 3-month period to 31 March 2023 and a 12-month period to 31 March 2024.

Two equal periods of 7.5 months.

A single 15-month chargeable accounting period.

How to approach this question

Remember the rule for long periods of account: split into the first 12 months, followed by the remaining balance.

Full Answer

A.A 12-month period to 31 December 2023 and a 3-month period to 31 March 2024.✓ Correct

For Corporation Tax, a period of account exceeding 12 months must be split. The first Chargeable Accounting Period (CAP) is for the first 12 months (1 Jan 2023 to 31 Dec 2023). The second CAP is for the remaining period (1 Jan 2024 to 31 March 2024).

Common mistakes

Splitting the period backwards (12 months at the end) or splitting it proportionally.

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Practice the full ACCA TX — Taxation Practice Exam 3

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