Tax Glossary

Sales divided by working capital.

The amount of additional funding required by a company to operate its fixed assets, e.g. money to pay staff and bills while waiting for customers to pay. Working capital is equal to capital employed less fixed assets.

Cease trading and liquidate a company.

The process by which an employee acquires unconditional rights under share-based payment schemes or pension schemes.

An expense which changes even with small changes in volume (e.g. raw materials costs).

The difference between a company’s outputs and inputs.

The number of days’ worth of purchases that have not been paid for by the company at the year end. Calculated as year-end trade creditors divided by daily purchases (excluding VAT in both cases).

Duration of a loan, redeemable preference share or other instrument.

The income on which HMRC calculates the corporation tax payable by a company.

A fixed asset that can be touched, such as property, plant, equipment.

(Turnover) The total revenues of a company in an accounting period.

The order in which different creditors’ and shareholders’ claims over the assets of a company are met when the company is wound up and the assets distributed.

(Listed company) A company whose shares can be bought or sold readily through a recognised stock exchange.

Current assets less stock divided by current liabilities.

An auditors’ report which has qualification to the usual ‘true and fair’ statement.