Business Taxation: Trading Profit, Self Employment, VAT Schemes

Business
Taxation

Table of Contents
INTRODUCTION...........................................................................................................................1
QUESTION 1...................................................................................................................................1
Linda's trading profit for the year ended 31st march 2021.........................................................1
QUESTION 2...................................................................................................................................3
Criteria for the use for employment for self employment, why people prefer self employment:
......................................................................................................................................................3
QUESTION 3...................................................................................................................................5
Discussion Six badges for trade...................................................................................................5
Different VAT schemes for the various VAT registered companies...........................................6
Capital gain tax liability ..............................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business taxation refers to the tax the business must have to pay when the normal
operations of the business arises. The tax regulations are to be followed by the company in an
proper manner and will not affect the organisation. It is an compulsory payment that every
organisation has to pay so that in future there will no issues arise (Arnold, Ault and Cooper,
2019). The taxation is classified into two parts direct tax and indirect tax. Different types of the
business have to pay different taxes which are charged by the business organisation. There are 5
types of the taxes that the business has to pay that are Gross receipt tax, corporate franchise tax,
employment withholding tax, Excise tax, value added tax. There are some companies which have
to pay the high taxes as they are restricted like the alcohol company. These taxes are collected by
the government and invest in the social programmes and the administration or building up of the
infrastructure in an organisation. There are various industries like mining, insurance they have to
pay the extra taxes as they are using the resources of an environment. The topic cover under this
report are the Linda's trading profit, six badges of trade, VAT schemes, inheritance tax arise and
capital gain tax liability.
QUESTION 1
Linda's trading profit for the year ended 31st march 2021
Trading profit account is equal to the activities from where there is proper earning. These
do not include expenses and the incomes arises from the assets. Trading account is prepared by
the company to identify the loss and the profit that the business is earning and have the growth.
This trading account mostly includes the buying and the selling of the activities so the decision
regarding the business are to be taken in the proper manner and will not affect the organisation. It
is an indicator the business must have to increase the probability so the decisions are to be taken
in an properly in an organisation. These profits are arise from the sales and the purchase of the
securities in an organisation so that the company may now about its position weather the
company is suffering from loss or profit. They help in identifying the risk which is involved in
the business while preparing the accounts. It also helps in accomplishing the objectives of the
business and have the future growth of the organisation. It helps the managers to take the
financial decision and have the growth in an organisation. Trading, income statement, balance
sheet are included in financial statements. The direct expense incurred by the company are

shown in the trading account. Trading income statements helps the business to earn the profit,
net profits so the decisions are to be taken in proper manner. It also helps in showing the
relationships of the cost of goods sold and gross profit so decisions are to be taken in proper
manner and will not affect the organisation (Aslam and Shah, 2017). It helps in providing the
information related to the trading activities in an organisation. It also helps in showing various
expenses that are included in the business and have the future growth. Trading profit can be
easily calculated before we are deducting the capital allowances so the decisions are to be taken
in an proper manner and helps in finding out the financial position of the company and the
decision regarding this are to be taken in the proper manner and helps in estimating the targets of
the organisation properly and have the future growth.
Trading profits ( before deduction for capital allowances)
Particulars £ Amount
Net profits as per accounts.... 6 9 6 0
Add: Expenditures which shows
in the income account but not
allowable
Depreciation 2 5 0 0
Installation of new improved
heating systems
3 8 0 0
Telephone cost 2 2 0
motor expense 6 5 0
Business entertaining 5 2 0
general bad debts provision 2 0 0 7 8 9 0
1 4 8 5 0
Deduction
Income not taxable as trading
income