The tax charge for the year comprises corporation tax on taxable profits of £5,042.60 (2023: £Nil). This amount is recognised in the profit and loss account.
In addition, the company is subject to the provisions of Section 455 CTA 2010 in respect of loans to participators. At 30 November 2024, the following balances were recognised:
Section 455 tax payable of £12,197.73, arising on overdrawn directors’ loan account balances at the year end.
Section 455 tax recoverable of £5,792.25, being tax repayable in respect of a bonus credited to the directors’ loan account and cleared within nine months of the year end.
Accordingly, the net Section 455 liability at the balance sheet date is £6,405.48, which, together with the normal corporation tax liability of £5,042.60, results in total corporation tax creditors of £11,448.08.
During the year, a prior year adjustment was made to remove a Section 455 debtor of £7,269.41 that had been recognised in the 2023 financial statements. This balance related to a repayment that was not due following the amendment of the 2023 corporation tax return. The adjustment has been recorded directly against retained earnings.