Corporation Tax - A simple question

Hello All,

A quick question about corporation tax if I may. Did the end of year stuff with my accountant, and was too shocked at the huge amount of this years Corp Tax to really understand what he was saying, so will check it here if you dont all mind.

Lets assume its Year1, and in year 1 I have figures of.....

Revenue = £100 Costs (all) = £50 Profit = £50

Therefore (keeping it real simple) I pay my 20(odd)% corp tax on the £50 profit. Ok, fair enough.

Year2....

Revenue (for the year) = £100 Costs (all, for the year) = £50 Profit (for the year) = £50

so in my simple way of thinking, thats again, 20(ish)% of the £50. But if I got things right, my profit is not £50 for year 2, becuase I have cash going forward (the Y1 £50 minus the corp tax), so I have say £85 profit Y2 - so pay 20(ish)% of £85?

Is this right? In which case, I am paying tax every year on the same money.

does that make sense? Am I correct?

Thanks

Jaffa (PS. Please be kind in your replies, I am not an accountant).

Reply to
JaffaB
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Yes, OK.

Yes it is.

No. Your cash going forward is a balance sheet item, it's not "revenue". Revenue is what you earn, not what you have. The surplus cash from one year therefore does not count as part of subsequent years' profits.

Reply to
Ronald Raygun

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