Tx notes fa22 Final

State how the total cost of food and heat and light may be dealt with for tax purposes and 
calculate Eve’s adjusted trading profit assuming the election for the flat rate private use 
adjustment has been made. 
Eve may either establish an agreed split between business and private use and add back the private 
use proportion or simply use the flat rate private use adjustment and add back £4,200, giving an 
adjusted trading profit figure of £27,200 (23,000 + 4,200).
If a question is set using the cash basis it should be assumed that the election to use the relevant flat 
rate scheme has been made. 
Although the flat rate scheme applies to unincorporated businesses generally it will only be 
examined within the cash basis. 
If the cash basis is to be used in the examination it will be specifically mentioned and should only be 
used therefore if specifically required.
Students may now attempt Practice Questions 9 to 12



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Chapter 7
TAX ADJUSTED TRADING LOSSES – 
INDIVIDUALS 
1. Trading losses 
1.1. Trading Profit assessment 
(a)
If the basis period for a tax year has a trading loss, the trading profit assessment to include in 
the income tax computation is