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Question 5b ii
Cresco Ltd:
– Is a UK resident trading company.
– Commenced trading on 1 April 2012.
– Is registered for the purposes of value added tax (VAT).
– Has made significant trading losses in recent months such that the company will need to cease trading on 31 October 2016.
Cresco Ltd – trading losses:
– Recent and anticipated results are as follows:
| Year ended 31 March 2013 | Year ended 31 March 2014 | Year ended 31 March 2015 | Year ended 31 March 2016 | Period ending 31 October 2016 | |
|---|---|---|---|---|---|
| £ | £ | £ | £ | £ | |
| Trading (loss)/profit | (5,000) | 21,000 | 8,000 | (24,000) | (40,000) |
| Bank interest receivable | 1,000 | 3,000 | 3,000 | nil | nil |
– Cresco Ltd always claims relief for trading losses as early as possible.
Required:
(ii) Advise Cresco Ltd of the value added tax (VAT) implications of the cessation of its trade. (3 marks)