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(b) Explain the advantages from a tax point of view of operating the new business as a partnership rather thanas a company whilst it is making losses. You should calculate the tax adjusted trading loss for the yearending 31 March 2008 for both situations
题目
(b) Explain the advantages from a tax point of view of operating the new business as a partnership rather than
as a company whilst it is making losses. You should calculate the tax adjusted trading loss for the year
ending 31 March 2008 for both situations and indicate the years in which the loss relief will be obtained.
You are not required to prepare any other supporting calculations. (10 marks)
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第1题：
3 Assume that today’s date is 10 May 2005.
You have recently been approached by Fred Flop. Fred is the managing director and 100% shareholder of Flop
Limited, a UK trading company with one wholly owned subsidiary. Both companies have a 31 March year-end.
Fred informs you that he is experiencing problems in dealing with aspects of his company tax returns. The company
accountant has been unable to keep up to date with matters, and Fred also believes that mistakes have been made
in the past. Fred needs assistance and tells you the following:
Year ended 31 March 2003
The corporation tax return for this period was not submitted until 2 November 2004, and corporation tax of ￡123,500
was paid at the same time. Profits chargeable to corporation tax were stated as ￡704,300.
A formal notice (CT203) requiring the company to file a self-assessment corporation tax return (dated 1 February
2004) had been received by the company on 4 February 2004.
A detailed examination of the accounts and tax computation has revealed the following.
– Computer equipment totalling ￡50,000 had been expensed in the accounts. No adjustment has been made in
the tax computation.
– A provision of ￡10,000 was made for repairs, but there is no evidence of supporting information.
– Legal and professional fees totalling ￡46,500 were allowed in full without any explanation. Fred has
subsequently produced the following analysis:
Analysis of legal & professional fees
￡
Legal fees on a failed attempt to secure a trading loan 15,000
Debt collection agency fees 12,800
Obtaining planning consent for building extension 15,700
Accountant’s fees for preparing accounts 14,000
Legal fees relating to a trade dispute 19,000
– No enquiry has yet been raised by the Inland Revenue.
– Flop Ltd was a large company in terms of the Companies Act definition for the year in question.
– Flop Ltd had taxable profits of ￡595,000 in the previous year.
Year ended 31 March 2004
The corporation tax return has not yet been submitted for this year. The accounts are late and nearing completion,
with only one change still to be made. A notice requiring the company to file a self-assessment corporation tax return
(CT203) dated 27 July 2004 was received on 1 August 2004. No corporation tax has yet been paid.
1 – The computation currently shows profits chargeable to corporation tax of ￡815,000 before accounting
adjustments, and any adjustments for prior years.
– A company owing Flop Ltd ￡50,000 (excluding VAT) has gone into liquidation, and it is unlikely that any of this
money will be paid. The money has been outstanding since 3 September 2003, and the bad debt will need to
be included in the accounts.
1 Fred also believes there are problems in relation to the company’s VAT administration. The VAT return for the quarter
ended 31 March 2005 was submitted on 5 May 2005, and VAT of ￡24,000 was paid at the same time. The previous
return to 31 December 2004 was also submitted late. In addition, no account has been made for the VAT on the bad
debt. The VAT return for 30 June 2005 may also be late. Fred estimates the VAT liability for that quarter to be ￡8,250.
Required:
(a) (i) Calculate the revised corporation tax (CT) payable for the accounting periods ending 31 March 2003
and 2004 respectively. Your answer should include an explanation of the adjustments made as a result
of the information which has now come to light. (7 marks)
(ii) State, giving reasons, the due payment date of the corporation tax (CT) and the filing date of the
corporation tax return for each period, and identify any interest and penalties which may have arisen to
date. (8 marks)
正确答案：(a) Calculation of corporation tax
Year ended 31 March 2003
Corporation tax payable
There are three adjusting items:.
(i) The computers are capital items, as they have an enduring benefit. These need to be added back in the Schedule D
Case I calculation, and capital allowances claimed instead. The company is not small or medium by Companies Act
definitions and therefore no first year allowances are available. Allowances of ￡12,500 (50,000 x 25%) can be claimed,
leaving a TWDV of ￡37,500.
(ii) The provision appears to be general in nature. In addition there is insufficient information to justify the provision and it
should be disallowed until such times as it is released or utilised.
(iii) Costs relating to trading loan relationships are allowable, as are costs relating to the trade (debt collection, trade disputes
and accounting work). Costs relating to capital items (￡5,700) are not allowable so will have to be added back.
Total profit chargeable to corporation tax is therefore ￡704,300 + 50,000 – 12,500 + 10,000 + 5,700 = 757,500. There are two associates, and therefore the 30% tax rate starts at ￡1,500,000/2 = ￡750,000. Corporation tax payable is 30% x￡757,500 = ￡227,250.
Payment date
Although the rate of tax is 30% and the company ‘large’, quarterly payments will not apply, as the company was not large in the previous year. The due date for payment of tax is therefore nine months and one day after the end of the tax accounting period (31 March 2003) i.e. 1 January 2004.
Filing date
This is the later of:
– 12 months after the end of the period of account: 31 March 2004
– 3 months after the date of the notice requiring the return 1 May 2004
i.e. 1 May 2004.
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第2题：
(c) Without changing the advice you have given in (b), or varying the terms of Luke’s will, explain how Mabel
could further reduce her eventual inheritance tax liability and quantify the tax saving that could be made.
(3 marks)
The increase in the retail prices index from April 1984 to April 1998 is 84%.
You should assume that the rates and allowances for the tax year 2005/06 will continue to apply for the
foreseeable future.
正确答案：
(c) Further advice
Mabel should consider delaying one of the gifts until after 1 May 2007 such that it is made more than seven years after the
gift to the discretionary trust. Both PETs would then be covered by the nil rate band resulting in a saving of inheritance tax
of ￡6,720 (from (b)).
Mabel should ensure that she uses her inheritance tax annual exemption of ￡3,000 every year by, say, making gifts of ￡1,500
each year to both Bruce and Padma. The effect of this will be to save inheritance tax of ￡1,200 (￡3,000 x 40%) every year. -
第3题：
(c) Explain the capital gains tax (CGT) and income tax (IT) issues Paul and Sharon should consider in deciding
which form. of trust to set up for Gisella and Gavin. You are not required to consider inheritance tax (IHT) or
stamp duty land tax (SDLT) issues. (10 marks)
You should assume that the tax rates and allowances for the tax year 2005/06 apply throughout this question.
正确答案：
(c) As the trust is created in the settlors’ (Paul and Sharon’s) lifetime its creation will constitute a chargeable disposal for capital
gains tax. Also, as the settlors and trustees are connected persons, the disposal will be deemed to be at market value, resulting
in a chargeable gain of ￡80,000 (160,000 – 80,000). No taper relief will be available as the property is a non-business
asset, and has been held for less than three years, but annual exemptions of ￡17,000 (2 x ￡8,500) will be available.
However, in the case of a discretionary trust, gift hold over relief will be available. This is because the gift will constitute a
chargeable lifetime transfer and because there is an immediate charge to inheritance tax (even though no tax is payable due
to the nil rate band) relief is available if a specific accumulation and maintenance trust is used, as in this case the gift will
qualify as a potentially exempt transfer and so gift relief would only be available in respect of business assets. The use of a
basic discretionary trust will thus facilitate the deferral of an immediate capital gains tax charge of ￡25,200 (63,000 x 40%).
If/when the property is disposed of, however, the trustees will pay capital gains tax on the deferred gain at the trust income
tax rate of 40%, and have an annual exemption of only ￡4,250 (50% of the normal individual rate) available to them. The
40% rate of tax and lower annual exemption rate also apply to chargeable gains arising in a specific accumulation and
maintenance trust, as well as a basic discretionary trust.
A chargeable disposal between connected persons will also arise for the purposes of capital gains tax if/when the property
vests in a beneficiary, i.e. one or more of the beneficiaries becomes absolutely entitled to all or part of the income or capital
of the trust. Gift hold over relief will again be available on all assets in the case of a discretionary trust, but only on business
assets in the case of an accumulation and maintenance trust, except where a beneficiary becomes entitled to both income
and capital at the same time.
The trust will have taxable property income in the form. of net rents from its creation and in future years is also likely to have
other investment income, probably in the form. of interest, to the extent that monies are retained in the trust. Whichever form
of trust is used, the trustees will pay tax at the standard trust rate of 40% on income other than dividend income (32·5%),
except to the extent of (1) the first ￡500 of taxable income, which is taxed at the rate that would otherwise apply to such
income (i.e. 22% for non-savings (rental) income, 20% for savings income (interest) and 10% for dividends) but, only to the
extent that it is not distributed; and (2) the legitimate trust management expenses, which are offsettable for the purposes of
the higher trust tax rates against the income with the lowest rate(s) of normal tax and so bear tax only at that rate. The higher
trust tax rate always applies to income that is distributed, other than to the extent that it has been treated as the settlor’s
income, and taxed at that settlor’s marginal tax rate.
As Paul and Sharon intend to create a trust for their unmarried minor (under 18) children, then even if the trust specifically
excludes them from any benefit under the trust, the trust income will be treated as theirs for income tax purposes to the extent
that it constitutes income paid for on behalf (including maintenance payments) of Gisella and Gavin; except where (1) the
total income arising does not exceed ￡100 gross per annum, and (2) income is held for the benefit of a child under an
accumulation and maintenance settlement, to the extent that it is not paid out. -
第4题：
4 (a) For this part, assume today’s date is 1 March 2006.
Bill and Ben each own 50% of the ordinary share capital in Flower Limited, an unquoted UK trading company
that makes electronic toys. Flower Limited was incorporated on 1 August 2005 with 1,000 ￡1 ordinary shares,
and commenced trading on the same day. The business has been successful, and the company has accumulated
a large cash balance of ￡180,000, which is to be used to purchase a new factory. However, Bill and Ben have
received an offer from a rival company, which they are considering. The offer provides Bill and Ben with two
alternative methods of payment for the purchase of their shares:
(i) ￡480,000 for the company, inclusive of the ￡180,000 cash balance.
(ii) ￡300,000 for the company assuming the cash available for the factory purchase is extracted prior to sale.
Bill and Ben each currently receive a gross salary of ￡3,750 per month from Flower Limited. Part of the offer
terms is that Bill and Ben would be retained as employees of the company on the same salary.
Neither Bill nor Ben has used any of their capital gains tax annual exemption for the tax year 2005/06.
Required:
(i) Calculate which of the following means of extracting the ￡180,000 from Flower Limited on 31 March
2006 will result in the highest after tax cash amount for Bill and Ben:
(1) payment of a dividend, or
(2) payment of a salary bonus.
You are not required to consider the corporation tax (CT) implications for Flower Limited in your
answer. (5 marks)
正确答案：
As a result, Bill and Ben would each be better off by ￡15,005 (69,142 – 54,137). If the cash were extracted by way
of dividend.
Tutorial note: In this answer the employers’ national insurance liability on the salary has been ignored. Credit would be
given to a candidate who recognised this issue. -
第5题：
(ii) Analyse the effect of delaying the sale of the business of the Stiletto Partnership to Razor Ltd until
30 April 2007 on Clint’s income tax and national insurance position.
You are not required to prepare detailed calculations of his income tax or national insurance liabilities.
(4 marks)
正确答案：(ii) The implications of delaying the sale of the business
The implications of delaying the sale of the business until 30 April would have been as follows:
– Clint would have received an additional two months of profits amounting to ￡6,920 (￡20,760 x 1/3).
– Clint’s trading income in 2006/07 would have been reduced by ￡13,015 (￡43,723 – ￡30,708), much of which
would have been subject to income tax at 40%. His additional trading income in 2007/08 of ￡19,935 would all
have been taxed at 10% and 22%.
– Clint is entitled to the personal age allowance of ￡7,280 in both years. However, it is abated by ￡1 for every ￡2
by which his total income exceeds ￡20,100. Once Clint’s total income exceeds ￡24,590 (￡20,100 + ((￡7,280
– ￡5,035) x 2)), his personal allowance will be reduced to the standard amount of ￡5,035. Accordingly, the
increased personal allowance would not be available in 2006/07 regardless of the year in which the business was
sold. It is available in 2007/08 (although part of it is wasted) but would not have been if the sale of the business
had been delayed.
– Clint’s class 4 national insurance contributions in 2006/07 would have been reduced due to the fall in the level
of his trading income. However, much of the saving would be at 1% only. Clint is not liable to class 4 national
insurance contributions in 2007/08 as he is 65 at the start of the year.
– Changing the date on which the business was sold would have had no effect on Clint’s class 2 liability as he is
not required to make class 2 contributions once he is 65 years old.
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第6题：
(c) Calculate and explain the amount of income tax relief that Gerard will obtain in respect of the pension
contributions he proposes to make in the tax year 2007/08 and contrast this with how his position could be
improved by delaying some of the contributions that he could have made in 2007/08 until 2008/09. You
should include relevant supporting calculations and quantify the additional tax savings arising as a result of
your advice.
You should ignore the proposed changes to the bonus scheme for this part of this question and assume that
Gerard’s income will not change in 2008/09. (12 marks)
正确答案：
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第7题：
3 Palm plc recently acquired 100% of the ordinary share capital of Nikau Ltd from Facet Ltd. Palm plc intends to use
Nikau Ltd to develop a new product range, under the name ‘Project Sabal’. Nikau Ltd owns shares in a non-UK
resident company, Date Inc.
The following information has been extracted from client files and from a meeting with the Finance Director of Palm
plc.
Palm plc:
– Has more than 40 wholly owned subsidiaries such that all group companies pay corporation tax at 30%.
– All group companies prepare accounts to 31 March.
– Acquired Nikau Ltd on 1 November 2007 from Facet Ltd, an unrelated company.
Nikau Ltd:
– UK resident company that manufactures domestic electronic appliances for sale in the European Union (EU).
– Large enterprise for the purposes of the enhanced relief available for research and development expenditure.
– Trading losses brought forward as at 1 April 2007 of ￡195,700.
– Budgeted taxable trading profit of ￡360,000 for the year ending 31 March 2008 before taking account of ‘Project
Sabal’.
– Dividend income of ￡38,200 will be received in the year ending 31 March 2008 in respect of the shares in Date
Inc.
‘Project Sabal’:
– Development of a range of electronic appliances, for sale in North America.
– Project Sabal will represent a significant advance in the technology of domestic appliances.
– Nikau Ltd will spend ￡70,000 on staffing costs and consumables researching and developing the necessary
technology between now and 31 March 2008. Further costs will be incurred in the following year.
– Sales to North America will commence in 2009 and are expected to generate significant profits from that year.
Shares in Date Inc:
– Nikau Ltd owns 35% of the ordinary share capital of Date Inc.
– The shares were purchased from Facet Ltd on 1 June 2003 for their market value of ￡338,000.
– The sale was a no gain, no loss transfer for the purposes of corporation tax.
– Facet Ltd purchased the shares in Date Inc on 1 March 1994 for ￡137,000.
Date Inc:
– A controlled foreign company resident in the country of Palladia.
– Annual chargeable profits arising out of property investment activities are approximately ￡120,000, of which
approximately ￡115,000 is distributed to its shareholders each year.
The tax system in Palladia:
– No taxes on income or capital profits.
– 4% withholding tax on dividends paid to shareholders resident outside Palladia.
Required:
(a) Prepare detailed explanatory notes, including relevant supporting calculations, on the effect of the following
issues on the amount of corporation tax payable by Nikau Ltd for the year ending 31 March 2008.
(i) The costs of developing ‘Project Sabal’ and the significant commercial changes to the company’s
activities arising out of its implementation. (8 marks)
正确答案：
(a) Nikau Ltd – Effect on corporation tax payable for the year ending 31 March 2008
(i) Project Sabal
Research and development expenditure
The expenditure incurred in respect of research and development will give rise to an enhanced deduction for the
purposes of computing the taxable trading profits of Nikau Ltd. The enhanced deduction is 125% of the qualifying
expenditure as Nikau Ltd is a large enterprise for this purpose.
The expenditure will reduce the profits chargeable to corporation tax of Nikau Ltd by ￡87,500 (￡70,000 x 1·25) and
its corporation tax liability by ￡26,250 (￡87,500 x 30%).
The budgeted expenditure will qualify for the enhanced deduction because it appears to satisfy the following conditions.
– It is likely to qualify as research and development expenditure within generally accepted accounting principles as
it will result in new technical knowledge and the production of a substantially improved device for use in the
industry.
– It exceeds ￡10,000 in Nikau Ltd’s accounting period.
– It relates to staff costs, consumable items or other qualifying expenditure as opposed to capital items.
– It will result in further trading activities for Nikau Ltd.
Use of brought forward trading losses
The development of products for the North American market is likely to represent a major change in the nature and
conduct of the trade of Nikau Ltd. This is because the company is developing new products and intends to sell them in
a new market. It is a major change as sales to North America are expected to generate significant additional profits.
Because this change will occur within three years of the change in the ownership of Nikau Ltd on 1 November 2007,
any trading losses arising prior to that date cannot be carried forward beyond that date.
Accordingly, the trading losses brought forward may only be offset against ￡158,958 ((￡360,000 – ￡87,500) x 7/12)
of the company’s trading profits for the year. The remainder of the trading losses ￡36,742 (￡195,700 – ￡158,958) will
be lost resulting in lost tax relief of ￡11,023 (￡36,742 x 30%).
Tutorial note
The profits for the year ending 31 March 2008 will be apportioned to the periods pre and post 1 November 2007 on
either a time basis or some other basis that is just and reasonable. -
第8题：
(ii) Explain how the inclusion of rental income in Coral’s UK income tax computation could affect the
income tax due on her dividend income. (2 marks)
You are not required to prepare calculations for part (b) of this question.
Note: you should assume that the tax rates and allowances for the tax year 2006/07 and for the financial year to
31 March 2007 will continue to apply for the foreseeable future.
正确答案：
(ii) The effect of taxable rental income on the tax due on Coral’s dividend income
Remitting rental income to the UK may cause some of Coral’s dividend income currently falling within the basic rate
band to fall within the higher rate band. The effect of this would be to increase the tax on the gross dividend income
from 0% (10% less the 10% tax credit) to 221/2% (321/2% less 10%).
Tutorial note
It would be equally acceptable to state that the effective rate of tax on the dividend income would increase from 0%
to 25%. -
第9题：
(b) Calculate the amount of input tax that will be recovered by Vostok Ltd in respect of the new premises in the
year ending 31 March 2009 and explain, using illustrative calculations, how any additional recoverable input
tax will be calculated in future years. (5 marks)
正确答案：
(b) Recoverable input tax in respect of new premises
Vostok Ltd will recover ￡47,880 (￡446,500 x 7/47 x 72%) in the year ending 31 March 2009.
The capital goods scheme will apply to the purchase of the building because it is to cost more than ￡250,000. Under the
scheme, the total amount of input tax recovered reflects the use of the building over the period of ownership, up to a maximum
of ten years, rather than merely the year of purchase.
Further input tax will be recovered in future years as the percentage of exempt supplies falls. (If the percentage of exempt
supplies were to rise, Vostok Ltd would have to repay input tax to HMRC.)
The additional recoverable input tax will be computed by reference to the percentage of taxable supplies in each year including
the year of sale. For example, if the percentage of taxable supplies in a particular subsequent year were to be 80%, the
additional recoverable input tax would be computed as follows.
￡446,500 x 7/47 x 1/10 x (80% – 72%) = ￡532.
Further input tax will be recovered in the year of sale as if Vostok Ltd’s supplies in the remaining years of the ten-year period
are fully vatable. For example, if the building is sold in year seven, the additional recoverable amount for the remaining three
years will be calculated as follows.
￡446,500 x 7/47 x 1/10 x (100% – 72%) x 3 = ￡5,586. -
第10题：
3 The Stiletto Partnership consisted of three partners, Clint, Ben and Amy, who shared the profits of the business
equally. On 28 February 2007 the partners sold the business to Razor Ltd, in exchange for shares in Razor Ltd, with
each former partner owning one third of the new company.
The recent, tax adjusted, trading profits of the Stiletto Partnership have been as follows:
￡
Year ended 30 June 2006 92,124
1 July 2006 to 28 February 2007 81,795
Clint, who was 65 on 5 October 2006, retired when the business was sold to Razor Ltd. He is now suggesting that
if the sale of the partnership, and his retirement, had been delayed until 30 April 2007, his total tax liability would
have been reduced. Clint’s only other income is gross pension income of ￡6,100 per year, which he began receiving
in the tax year 2005/06. Clint did not receive any salary or dividends from Razor Ltd. It is estimated that the
partnership’s tax adjusted trading profits for the period from 1 March 2007 to 30 April 2007 would have been
￡20,760. Clint has overlap profits of ￡14,250 brought forward from when the partnership began trading.
Razor Ltd manufactures industrial cutting tools. On 1 July 2007, Razor Ltd will subscribe for the whole of the ordinary
share capital of Cutlass Inc, a company newly incorporated in the country of Sharpenia. It is intended that Cutlass
Inc will purchase partly finished tools from Razor Ltd and customise them in Sharpenia. It is anticipated that Cutlass
Inc’s annual profits chargeable to corporation tax will be approximately ￡120,000.
Ben and Amy will be the directors of Cutlass Inc, although Ben will not be involved in the company’s business on a
day-to-day basis. Amy intends to spend one or two weeks each month in the country of Sharpenia looking after the
company’s affairs. The remainder of her time will be spent in the UK. Amy has employment contracts with both Razor
Ltd and Cutlass Inc and her duties for Cutlass Inc will be carried out wholly in Sharpenia. Cutlass Inc will pay for
Amy’s flights to and from Sharpenia and for her husband and baby to visit her there twice a year. Amy is currently
UK resident and ordinarily resident.
The system of income tax and corporation tax in the country of Sharpenia is broadly similar to that in the UK although
the rate of corporation tax is 38% regardless of the level of profits. There is a double tax treaty between the UK and
Sharpenia based on the OECD model treaty. The clause in the treaty dealing with company residency states that a
company resident in both countries under domestic law will be regarded under the treaty as being resident only in the
country where it is effectively managed and controlled. Sharpenia is not a member of the European Union.
Required:
(a) (i) Calculate Clint’s taxable trading profits for the tax years 2006/07 and 2007/08 for both of the
alternative retirement dates (28 February 2007 and 30 April 2007). (3 marks)
正确答案：
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第11题：
You work as a network Exchange administrator at Company.com.The Company.com network currently consists of a single Active Directory forest containing a single site named KingSite1.The Company.com organization makes use of Microsoft Exchange Server 2010 as their messaging solution.Company.com has recently configured the mailbox server as members of a database availability group （DAG） with a public folder database. During the course of the business week you receive instruction from Company.com to create a new Active Directory site and install Exchange server in the site whilst ensuring the public folders are stored on servers in both sites. What should you do？（）
- A、You should consider having clustered continuous replication （CCR） configured on two servers in the new site.You should then have the replication settings for all public folder databases modified.
- B、You should consider having the standby continuous replication （SCR） configured on a server in the new site.You should then have the Enable-StorageGroupCopy cmdlet run from a server in the new site.
- C、You should consider having a public folder database created on a server in the new site.You should then have the replication settings for all public folders modified.
- D、You should consider having a public folder database created on a server in the new site.You should then have the set-DatabaseAvailabilityGroup cmdlet run from a server in the new site.
正确答案:C -
第12题：
单选题You work as a network Exchange administrator at Company.com.The Company.com network currently consists of a single Active Directory forest containing a single site named KingSite1.The Company.com organization makes use of Microsoft Exchange Server 2010 as their messaging solution.Company.com has recently configured the mailbox server as members of a database availability group （DAG） with a public folder database. During the course of the business week you receive instruction from Company.com to create a new Active Directory site and install Exchange server in the site whilst ensuring the public folders are stored on servers in both sites. What should you do？（）AYou should consider having clustered continuous replication （CCR） configured on two servers in the new site.You should then have the replication settings for all public folder databases modified.
BYou should consider having the standby continuous replication （SCR） configured on a server in the new site.You should then have the Enable-StorageGroupCopy cmdlet run from a server in the new site.
CYou should consider having a public folder database created on a server in the new site.You should then have the replication settings for all public folders modified.
DYou should consider having a public folder database created on a server in the new site.You should then have the set-DatabaseAvailabilityGroup cmdlet run from a server in the new site.
正确答案： B解析： 暂无解析 -
第13题：
(b) Assuming that the income from the sale of the books is not treated as trading income, calculate Bob’s taxable
income and gains for all relevant tax years, using any loss reliefs in the most tax-efficient manner. Your
answer should include an explanation of the loss reliefs available and your reasons for using (or not using)
them. (12 marks)
Assume that the rates and allowances for 2004/05 apply throughout this part of the question.
正确答案：
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第14题：
3 On 1 January 2007 Dovedale Ltd, a company with no subsidiaries, intends to purchase 65% of the ordinary share
capital of Hira Ltd from Belgrove Ltd. Belgrove Ltd currently owns 100% of the share capital of Hira Ltd and has no
other subsidiaries. All three companies have their head offices in the UK and are UK resident.
Hira Ltd had trading losses brought forward, as at 1 April 2006, of ￡18,600 and no income or gains against which
to offset losses in the year ended 31 March 2006. In the year ending 31 March 2007 the company expects to make
further tax adjusted trading losses of ￡55,000 before deduction of capital allowances, and to have no other income
or gains. The tax written down value of Hira Ltd’s plant and machinery as at 31 March 2006 was ￡96,000 and
there will be no fixed asset additions or disposals in the year ending 31 March 2007. In the year ending 31 March
2008 a small tax adjusted trading loss is anticipated. Hira Ltd will surrender the maximum possible trading losses
to Belgrove Ltd and Dovedale Ltd.
The tax adjusted trading profit of Dovedale Ltd for the year ending 31 March 2007 is expected to be ￡875,000 and
to continue at this level in the future. The profits chargeable to corporation tax of Belgrove Ltd are expected to be
￡38,000 for the year ending 31 March 2007 and to increase in the future.
On 1 February 2007 Dovedale Ltd will sell a small office building to Hira Ltd for its market value of ￡234,000.
Dovedale Ltd purchased the building in March 2005 for ￡210,000. In October 2004 Dovedale Ltd sold a factory
for ￡277,450 making a capital gain of ￡84,217. A claim was made to roll over the gain on the sale of the factory
against the acquisition cost of the office building.
On 1 April 2007 Dovedale Ltd intends to acquire the whole of the ordinary share capital of Atapo Inc, an unquoted
company resident in the country of Morovia. Atapo Inc sells components to Dovedale Ltd as well as to other
companies in Morovia and around the world.
It is estimated that Atapo Inc will make a profit before tax of ￡160,000 in the year ending 31 March 2008 and will
pay a dividend to Dovedale Ltd of ￡105,000. It can be assumed that Atapo Inc’s taxable profits are equal to its profit
before tax. The rate of corporation tax in Morovia is 9%. There is a withholding tax of 3% on dividends paid to
non-Morovian resident shareholders. There is no double tax agreement between the UK and Morovia.
Required:
(a) Advise Belgrove Ltd of any capital gains that may arise as a result of the sale of the shares in Hira Ltd. You
are not required to calculate any capital gains in this part of the question. (4 marks)
正确答案：
(a) Capital gains that may arise on the sale by Belgrove Ltd of shares in Hira Ltd
Belgrove Ltd will realise a capital gain on the sale of the shares unless the substantial shareholding exemption applies. The
exemption will be given automatically provided all of the following conditions are satisfied.
– Belgrove Ltd has owned at least 10% of Hira Ltd for a minimum of 12 months during the two years prior to the sale.
– Belgrove Ltd is a trading company or a member of a trading group during that 12-month period and immediately after
the sale.
– Hira Ltd is a trading company or the holding company of a trading group during that 12-month period and immediately
after the sale.
Hira Ltd will no longer be in a capital gains group with Belgrove Ltd after the sale. Accordingly, a capital gain, known as a
degrouping charge, may arise in Hira Ltd. A degrouping charge will arise if, at the time it leaves the Belgrove Ltd group, Hira
Ltd owns any capital assets which were transferred to it at no gain, no loss within the previous six years by a member of the
Belgrove Ltd capital gains group. -
第15题：
(ii) Assuming the new structure is implemented with effect from 1 August 2006, calculate the level of
management charge that should be made by Bold plc to Linden Limited for the year ended 31 July
2007, so as to minimise the group’s overall corporation tax (CT) liability for that year. (2 marks)
正确答案：
(ii) For the year ended 31 July 2007, there will be two associated companies in the group. Bold plc will count as an
associated company as it is not dormant throughout the period in question. As a result, the corporation tax limits will be
divided by two (i.e. the number of associates) giving an upper limit of ￡750,000 (￡1·5 million/2). As Linden Limited
is anticipated to make profits of ￡1·4 million in the year to 31 July 2007 it will pay corporation tax at the rate of 30%.
Bold plc can earn trading profits up to ￡150,000 (￡300,000/2) and pay tax at the rate of 19%. It will therefore
minimise the group’s corporation tax liability if maximum use is made of this small companies rate band, as it will save
￡16,500 (150,000 x (30% – 19%)) of corporation tax for the year to 31 July 2007. Bold plc should therefore make
a management charge of sufficient size to give it profits for that year equal to ￡150,000.
While the transfer pricing legislation no longer applies to small and medium sized enterprises, Bold plc should
nevertheless ensure that there is evidence to support the actual charge made in terms of the services provided. -
第16题：
(ii) Calculate the corporation tax (CT) payable by Tay Limited for the year ended 31 March 2006, taking
advantage of all available reliefs. (3 marks)
正确答案：
-
第17题：
5 (a) Carver Ltd was incorporated and began trading in August 2002. It is a close company with no associated
companies. It has always prepared accounts to 31 December and will continue to do so in the future.
It has been decided that Carver Ltd will sell its business as a going concern to Blade Ltd, an unconnected
company, on 31 July 2007. Its premises and goodwill will be sold for ￡2,135,000 and ￡290,000 respectively
and its machinery and equipment for ￡187,000. The premises, which do not constitute an industrial building,
were acquired on 1 August 2002 for ￡1,808,000 and the goodwill has been generated internally by the
company. The machinery and equipment cost ￡294,000; no one item will be sold for more than its original cost.
The tax adjusted trading profit of Carver Ltd in 2007, before taking account of both capital allowances and the
sale of the business assets, is expected to be ￡81,000. The balance on the plant and machinery pool for the
purposes of capital allowances as at 31 December 2006 was ￡231,500. Machinery costing ￡38,000 was
purchased on 1 March 2007. Carver Ltd is classified as a small company for the purposes of capital allowances.
On 1 August 2007, the proceeds from the sale of the business will be invested in either an office building or a
portfolio of UK quoted company shares, as follows:
Office building
The office building would be acquired for ￡3,100,000; the vendor is not registered for value added tax (VAT).
Carver Ltd would borrow the additional funds required from a UK bank. The building is let to a number of
commercial tenants who are not connected with Carver Ltd and will pay rent, in total, of ￡54,000 per calendar
quarter, in advance, commencing on 1 August 2007. The company’s expenditure for the period from 1 August
2007 to 31 December 2007 is expected to be:
￡
Loan interest payable to UK bank 16,000
Building maintenance costs 7,500
Share portfolio
Shares would be purchased for the amount of the proceeds from the sale of the business with no need for further
loan finance. It is estimated that the share portfolio would generate dividends of ￡36,000 and capital gains, after
indexation allowance, of ￡10,000 in the period from 1 August 2007 to 31 December 2007.
All figures are stated exclusive of value added tax (VAT).
Required:
(i) Taking account of the proposed sale of the business on 31 July 2007, state with reasons the date(s) on
which Carver Ltd must submit its corporation tax return(s) for the year ending 31 December 2007.
(2 marks)
正确答案：
(a) (i) Due date for submission of corporation tax return
Carver Ltd intends to cease trading on 31 July 2007. This will bring to an end the accounting period that began on
1 January 2007. A new accounting period will commence on 1 August 2007 and end on the company’s accounting
reference date on 31 December 2007.
Carver Ltd is required to submit its corporation tax return by the later of:
– one year after the end of its accounting period; and
– one year after the end of the period of account in which the last day of the accounting period falls.
Accordingly, the company must submit its corporation tax returns for both accounting periods by 31 December 2008. -
第18题：
(c) Explanatory notes, together with relevant supporting calculations, in connection with the loan. (8 marks)
Additional marks will be awarded for the appropriateness of the format and presentation of the schedules, the
effectiveness with which the information is communicated and the extent to which the schedules are structured in
a logical manner. (3 marks)
Notes: – you should assume that the tax rates and allowances for the tax year 2006/07 and for the financial year
to 31 March 2007 apply throughout the question.
– you should ignore value added tax (VAT).
正确答案：
(c) Tax implications of there being a loan from Flores Ltd to Banda
Flores Ltd should have paid tax to HMRC equal to 25% of the loan, i.e. ￡5,250. The tax should have been paid on the
company’s normal due date for corporation tax in respect of the accounting period in which the loan was made, i.e. 1 April
following the end of the accounting period.
The tax is due because Flores Ltd is a close company that has made a loan to a participator and that loan is not in the ordinary
course of the company’s business.
HMRC will repay the tax when the loan is either repaid or written off.
Flores Ltd should have included the loan on Banda’s Form. P11D in order to report it to HMRC.
Banda should have paid income tax on an annual benefit equal to 5% of the amount of loan outstanding during each tax
year. Accordingly, for each full year for which the loan was outstanding, Banda should have paid income tax of ￡231
(￡21,000 x 5% x 22%).
Interest and penalties may be charged in respect of the tax underpaid by both Flores Ltd and Banda and in respect of the
incorrect returns made to HMRC
Willingness to act for Banda
We would not wish to be associated with a client who has engaged in deliberate tax evasion as this poses a threat to the
fundamental principles of integrity and professional behaviour. Accordingly, we should refuse to act for Banda unless she is
willing to disclose the details regarding the loan to HMRC and pay the ensuing tax liabilities. Even if full disclosure is made,
we should consider whether the loan was deliberately hidden from HMRC or Banda’s previous tax adviser.
In addition, companies are prohibited from making loans to directors under the Companies Act. We should advise Banda to
seek legal advice on her own position and that of Flores Ltd. -
第19题：
(b) Explain why making sales of Sabals in North America will have no effect on Nikau Ltd’s ability to recover its
input tax. (3 marks)
Notes: – you should assume that the corporation tax rates and allowances for the financial year to 31 March 2007
will continue to apply for the foreseeable future.
– you should ignore indexation allowance.
正确答案：
(b) Recoverability of input tax
Sales by Nikau Ltd of its existing products are subject to UK VAT at 17·5% because it is selling to domestic customers who
will not be registered for VAT. Accordingly, at present, Nikau Ltd can recover all of its input tax.
Sales to customers in North America will be zero rated because the goods are being exported from the EU. Zero rated supplies
are classified as taxable for the purposes of VAT and therefore Nikau Ltd will continue to be able to recover all of its input tax. -
第20题：
(c) On the assumption that the administrators of Noland’s estate will sell quoted shares in order to fund the
inheritance tax due as a result of his death, calculate the value of the quoted shares that will be available to
transfer to Avril. You should include brief notes of your treatment of the house and the shares in Kurb Ltd.
(9 marks)
Note: you should assume that the tax rates and allowances for the tax year 2006/07 apply throughout this
question.
正确答案：(c) Value of quoted shares that can be transferred to Avril
The value of shares to be transferred to Avril will be equal to ￡370,000 less the inheritance tax due by the estate.
IHT is payable on transfers in the seven years prior to Noland’s death and on the death estate.
The only chargeable gift in the seven years prior to Noland’s death is the transfer to the discretionary trust. No tax is due in
respect of this gift as it is covered by the nil rate band.
-
第21题：
(ii) Write a letter to Donald advising him on the most tax efficient manner in which he can relieve the loss
incurred in the year to 31 March 2007. Your letter should briefly outline the types of loss relief available
and explain their relative merits in Donald’s situation. Assume that Donald will have no source of income
other than the business in the year of assessment 2006/07 and that any income he earned on a parttime
basis while at university was always less than his annual personal allowance. (9 marks)
Assume that the corporation tax rates and allowances for the financial year 2004 and the income tax rates
and allowances for 2004/05 apply throughout this question.
Relevant retail price index figures are:
January 1998 159·5
April 1998 162·6
正确答案：(ii) [Donald’s address] [Firm’s address]
Dear Donald [Date]
I understand that you have incurred a tax loss in your first year of trading. The following options are available in respect
of this loss.
1. The first option is to use the trading loss against other forms of income in the same year. If such a claim is made,
losses are offset against income before personal allowances.
Any excess loss can still be offset against capital gains of the year. However, any offset against capital gains is
before both taper relief and annual exemptions.
-
第22题：
You work as a network exchange administrator at company.com.the company.com network currently consists of a single active directory forest containing a single domain named company.com.the company.com organization makes use of microsoft exchange server 2010 as their messaging solution.company.com has recently added a distribution group named king distribute.during the course of the business week you receive instruction from company.com to ensure that a user named rory allen is able to view and approve the messages sent to king distribute whilst also making sure that rory allen cannot make any changes to the membership of king distribute.what should you do？（）
- A、you should consider having the message tracking management role assigned to rory allen.
- B、you should consider having rory allen added to the king distribute distribution list and create a new journal rule.
- C、you should consider having rory allen added to the king distribute distribution group’s managed by list.
- D、you should consider having rory allen assigned as a group moderator for the king distribute distribution group.
正确答案:D -
第23题：
You work as a network Exchange administrator at Company.com.The Company.com network currently consists of a single Active Directory forest containing a single domain named Company.com.The Company.com organization makes use of Microsoft Exchange Server 2010 as their messaging solution.During the course of the business week you receive instruction from Company.com to prevent the network user named Rory Allen from downloading attachments which are larger than 50 KB when making use of Exchange ActiveSync whilst ensuring your solution affects no other users. What should you do？（）
- A、You should consider having the properties of Rory Allen’s mailbox modified.
- B、You should consider having the properties if the default Exchange ActiveSync Mailbox policy modified.
- C、You should consider having a new ActiveSynce Device Access rule created.
- D、You should consider having a new Exchange ActiveSync Mailbox policy created.
正确答案:D