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(ii) A proposal which will increase the after tax proceeds from the sale of the Snapper plc loan stock and areasoned recommendation of a more appropriate form. of external finance. (3 marks)
题目
(ii) A proposal which will increase the after tax proceeds from the sale of the Snapper plc loan stock and a
reasoned recommendation of a more appropriate form. of external finance. (3 marks)
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更多“(ii) A proposal which will increase the after tax proceeds from the sale of the Snapper plc loan stock and areasoned recommendation of a more appropriate form. of external finance. (3 marks)”相关问题
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第1题：
(c) Assuming that Stuart:
(i) purchased 201,000 shares in Omega plc on 3 December 2005; and
(ii) dies on 20 December 2007,
calculate the potential inheritance tax (IHT) liability which would arise if Rebecca were to die on 1 March
2008, and no further tax planning measures were taken.
Assume that all asset values remain unchanged and that the current rates of inheritance tax continue to
apply. (6 marks)
正确答案：
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第2题：
(ii) Explain the income tax (IT), national insurance (NIC) and capital gains tax (CGT) implications arising on
the grant to and exercise by an employee of an option to buy shares in an unapproved share option
scheme and on the subsequent sale of these shares. State clearly how these would apply in Henry’s
case. (8 marks)
正确答案：
(ii) Exercising of share options
The share option is not part of an approved scheme, and will not therefore enjoy the benefits of such a scheme. There
are three events with tax consequences – grant, exercise and sale.
Grant. If shares or options over shares are sold or granted at less than market value, an income tax charge can arise on
the difference between the price paid and the market value. [Weight v Salmon]. In addition, if options can be exercised
more than 10 years after the date of the grant, an employment income charge can arise. This is based on the market
value at the date of grant less the grant and exercise priced.
In Henry’s case, the options were issued with an exercise price equal to the then market value, and cannot be exercised
more than 10 years from the grant. No income tax charge therefore arises on grant.
Exercise. On exercise, the individual pays the agreed amount in return for a number of shares in the company. The price
paid is compared with the open market value at that time, and if less, the difference is charged to income tax. National
insurance also applies, and the company has to pay Class 1 NIC. If the company and shareholder agree, the national
insurance can be passed onto the individual, and the liability becomes a deductible expense in calculating the income
tax charge.
In Henry’s case on exercise, the difference between market value (￡14) and the price paid (￡1) per share will be taxed
as income. Therefore, ￡130,000 (10,000 x (￡14 – ￡1)) will be taxed as income. In addition, national insurance will
be chargeable on the company at 12·8% (￡16,640) and on Henry at the rate of 1% (￡1,300).
Sale. The base cost of the shares is taken to be the market value at the time of exercise. On the sale of the shares, any
gain or loss arising falls under the capital gains tax rules, and CGT will be payable on any gain. Business asset taper
relief will be available as the company is an unquoted trading company, but the relief will only run from the time that
the share options are exercised – i.e. from the time when the shares were acquired.
In Henry’s case, the sale of the shares will immediately follow the exercise of the option (6 days later). The sale proceeds
and the market value at the time of exercise are likely to be similar; thus little to no gain is likely to arise. -
第3题：
(ii) Advise Benny of the amount of tax he could save by delaying the sale of the shares by 30 days. For the
purposes of this part, you may assume that the benefit in respect of the furnished flat is ￡11,800 per
year. (3 marks)
正确答案：
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第4题：
(c) Outline the ways in which Arthur and Cindy can reduce their income tax liability by investing in unquoted
shares and recommend, with reasons, which form. of investment best suits their circumstances. You are not
required to discuss the qualifying conditions applicable to the investment vehicle recommended. (5 marks)
You should assume that the income tax rates and allowances for the tax year 2005/06 apply throughout this
question
正确答案：
(c) Reduction of income tax liability by investing in unquoted shares
The two forms of investment
Income tax relief is available for investments in venture capital trusts (VCTs) and enterprise investment scheme (EIS) shares.
A VCT is a quoted company that invests in shares in a number of unquoted trading companies. EIS shares are shares in
qualifying unquoted trading companies.
Recommendation
The most suitable investment for Arthur and Cindy is a VCT for the following reasons.
– An investment in a VCT is likely to be less risky than investing directly in EIS companies as the risk will be spread over
a greater number of companies.
– The tax deduction is 40% of the amount invested as opposed to 20% for EIS shares.
– Dividends from a VCT are not taxable whereas dividends on EIS shares are taxed in the normal way. -
第5题：
(ii) Calculate Paul’s tax liability if he exercises the share options in Memphis plc and subsequently sells the
shares in Memphis plc immediately, as proposed, and show how he may reduce this tax liability.
(4 marks)
正确答案：
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第6题：
(ii) Following on from your answer to (i), evaluate the two purchase proposals, and advise Bill and Ben
which course of action will result in the highest amount of after tax cash being received by the
shareholders if the disposal takes place on 31 March 2006. (4 marks)
正确答案：
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第7题：
(ii) Advise Andrew of the tax implications arising from the disposal of the 7% Government Stock, clearly
identifying the tax year in which any liability will arise and how it will be paid. (3 marks)
正确答案：
(ii) Government stock is an exempt asset for the purposes of capital gains tax, however, as Andrew’s holding has a nominal
value in excess of ￡5,000, a charge to income tax will arise under the accrued income scheme. This charge to income
tax will arise in 2005/06, being the tax year in which the next interest payment following disposal falls due (20 April
2005) and it will relate to the income accrued for the period 21 October 2004 to 14 March 2005 of ￡279 (145/182
x ￡350). As interest on Government Stock is paid gross (unless the holder applies to receive it net), the tax due of ￡112
(￡279 x 40%) will be collected via the self-assessment system and as the interest was an ongoing source of income
will be included within Andrew’s half yearly payments on account payable on 31 January and 31 July 2006. -
第8题：
(ii) Any increase or decrease in the group’s budgeted corporation tax liability for the year ending 30 June
2008 due to the restructuring on the assumption that trading losses will be used as efficiently as
possible. (8 marks)
正确答案：(ii) The budgeted corporation tax liability for the year ending 30 June 2008
Following the proposed restructuring, Rapier Ltd will be carrying on four separate trades. The current year loss arising
in the Dirk trade can be offset against its total profits. Its three subsidiaries will be dormant and will not be associates
for the purpose of determining the rate of corporation tax.
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第9题：
(c) The inheritance tax payable by Adam in respect of the gift from his aunt. (4 marks)
Additional marks will be awarded for the appropriateness of the format and presentation of the memorandum and
the effectiveness with which the information is communicated. (2 marks)
Note: you should assume that the tax rates and allowances for the tax year 2006/07 will continue to apply for the
foreseeable future.
正确答案：
(c) Inheritance tax payable by Adam
The gift by AS’s aunt was a potentially exempt transfer. No tax will be due if she lives until 1 June 2014 (seven years after
the date of the gift).
The maximum possible liability, on the assumption that there are no annual exemptions or nil band available, is ￡35,216
(￡88,040 x 40%). This will only arise if AS’s aunt dies before 1 June 2010.
The maximum liability will be reduced by taper relief of 20% for every full year after 31 May 2010 for which AS’s aunt lives.
The liability will also be reduced if the chargeable transfers made by the aunt in the seven years prior to 1 June 2007 are
less than ￡285,000 or if the annual exemption for 2006/07 and/or 2007/08 is/are available. -
第10题：
(b) Prepare a reasoned explanation of how any capital gains tax arising in the UK on the sale of the paintings
can be minimised. (2 marks)
正确答案：
(b) Minimising capital gains tax on the sale of the paintings
Galileo will become resident and ordinarily resident from the date he arrives in the UK as he intends to stay for more than
three years. Prior to that date he will be neither resident nor ordinarily resident such that he will not be subject to UK capital
gains tax.
Galileo should sell the paintings before he leaves Astronomeria; this will avoid UK capital gains tax completely.
Tutorial note
The gains would be taxable on the remittance basis if the paintings were sold after Galileo’s arrival in the UK. However, this
would not help Galileo to minimise the capital gains tax due as he needs to bring the sales proceeds into the UK in order
to purchase a house. -
第11题：
(b) Given his recent diagnosis, advise Stuart as to which of the two proposed investments (Omikron plc/Omega
plc) would be the more tax efficient alternative. Give reasons for your choice. (3 marks)
正确答案：
(b) Both companies are listed. The only difference will be in the availability of inheritance tax relief – specifically business property
relief (BPR). If Stuart and Rebecca jointly hold in excess of 50% of the share capital of a listed company, BPR will apply at
the rate of 50%. Otherwise, no BPR is available.
Stuart can only buy 1,005,000 (￡422,100/￡0·42) shares in Omikron plc. This represents a shareholding of 2·00%
(1,005,000/50,250,000). As the shares in Omikron plc are listed, a 2% holding will not qualify for BPR.
At the moment, both Stuart and Rebecca own 2,400,000 shares in Omega plc. Their shareholdings are amalgamated for
IHT purposes under the related property rules. With a joint holding of 48%, BPR is not available. A further 200,001 shares
will be required to attain a 50% holding. Assuming Stuart and Rebecca can buy these shares, they must then hold their 50%
interest in the company for the period of at least two years in order to ensure that BPR applies.
On the basis that Stuart is expected to survive for two to three years, he should therefore buy further shares in Omega plc in
order to take advantage of the BPR available. -
第12题：
(a) The following figures have been calculated from the financial statements (including comparatives) of Barstead for
the year ended 30 September 2009:
increase in profit after taxation 80%
increase in (basic) earnings per share 5%
increase in diluted earnings per share 2%
Required:
Explain why the three measures of earnings (profit) growth for the same company over the same period can
give apparently differing impressions. (4 marks)
(b) The profit after tax for Barstead for the year ended 30 September 2009 was $15 million. At 1 October 2008 the company had in issue 36 million equity shares and a $10 million 8% convertible loan note. The loan note will mature in 2010 and will be redeemed at par or converted to equity shares on the basis of 25 shares for each $100 of loan note at the loan-note holders’ option. On 1 January 2009 Barstead made a fully subscribed rights issue of one new share for every four shares held at a price of $2·80 each. The market price of the equity shares of Barstead immediately before the issue was $3·80. The earnings per share (EPS) reported for the year ended 30 September 2008 was 35 cents.
Barstead’s income tax rate is 25%.
Required:
Calculate the (basic) EPS figure for Barstead (including comparatives) and the diluted EPS (comparatives not required) that would be disclosed for the year ended 30 September 2009. (6 marks)
正确答案：
(a)Whilstprofitaftertax(anditsgrowth)isausefulmeasure,itmaynotgiveafairrepresentationofthetrueunderlyingearningsperformance.Inthisexample,userscouldinterpretthelargeannualincreaseinprofitaftertaxof80%asbeingindicativeofanunderlyingimprovementinprofitability(ratherthanwhatitreallyis:anincreaseinabsoluteprofit).Itispossible,evenprobable,that(someof)theprofitgrowthhasbeenachievedthroughtheacquisitionofothercompanies(acquisitivegrowth).Wherecompaniesareacquiredfromtheproceedsofanewissueofshares,orwheretheyhavebeenacquiredthroughshareexchanges,thiswillresultinagreaternumberofequitysharesoftheacquiringcompanybeinginissue.ThisiswhatappearstohavehappenedinthecaseofBarsteadastheimprovementindicatedbyitsearningspershare(EPS)isonly5%perannum.ThisexplainswhytheEPS(andthetrendofEPS)isconsideredamorereliableindicatorofperformancebecausetheadditionalprofitswhichcouldbeexpectedfromthegreaterresources(proceedsfromthesharesissued)ismatchedwiththeincreaseinthenumberofshares.Simplylookingatthegrowthinacompany’sprofitaftertaxdoesnottakeintoaccountanyincreasesintheresourcesusedtoearnthem.Anyincreaseingrowthfinancedbyborrowings(debt)wouldnothavethesameimpactonprofit(asbeingfinancedbyequityshares)becausethefinancecostsofthedebtwouldacttoreduceprofit.ThecalculationofadilutedEPStakesintoaccountanypotentialequitysharesinissue.Potentialordinarysharesarisefromfinancialinstruments(e.g.convertibleloannotesandoptions)thatmayentitletheirholderstoequitysharesinthefuture.ThedilutedEPSisusefulasitalertsexistingshareholderstothefactthatfutureEPSmaybereducedasaresultofsharecapitalchanges;inasenseitisawarningsign.InthiscasethelowerincreaseinthedilutedEPSisevidencethatthe(higher)increaseinthebasicEPShas,inpart,beenachievedthroughtheincreaseduseofdilutingfinancialinstruments.Thefinancecostoftheseinstrumentsislessthantheearningstheirproceedshavegeneratedleadingtoanincreaseincurrentprofits(andbasicEPS);however,inthefuturetheywillcausemoresharestobeissued.ThiscausesadilutionwherethefinancecostperpotentialnewshareislessthanthebasicEPS. -
第13题：
(ii) Illustrate the benefit of revising the corporate structure by calculating the corporation tax (CT) payable
for the year ended 31 March 2006, on the assumptions that:
(1) no action is taken; and
(2) an amended structure as recommended in (i) above is implemented from 1 June 2005. (3 marks)
正确答案：
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第14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15题：
(ii) Compute the annual income tax saving from your recommendation in (i) above as compared with the
situation where Cindy retains both the property and the shares. Identify any other tax implications
arising from your recommendation. Your answer should consider all relevant taxes. (3 marks)
正确答案：
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第16题：
(ii) Explain, with reasons, the relief available in respect of the fall in value of the shares in All Over plc,
identify the years in which it can be claimed and state the time limit for submitting the claim.
(3 marks)
正确答案：
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第17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18题：
(iii) State how your answer in (ii) would differ if the sale were to be delayed until August 2006. (3 marks)
正确答案：
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第19题：
(ii) State the taxation implications of both equity and loan finance from the point of view of a company.
(3 marks)
正确答案：
(ii) A company needs to be aware of the following issues:
Equity
(1) Costs incurred in issuing share capital are not allowed as a trading deduction.
(2) Distributions to investors are not allowed as a trading deduction.
(3) The cost of making distributions to shareholders are disallowable.
(4) Where profits are taxed at an effective rate of less than 19%, any profits used to make a distribution to noncorporate
shareholders will themselves be taxed at the full 19% rate.
Loan finance/debt
(1) The incidental costs of obtaining/raising loan finance are broadly deductible as a trading expense.
(2) Capital costs of raising loan finance (for example, loans issued at a discount) are not deductible for tax purposes.
(3) Interest incurred on a loan to finance a business is deductible from trading income. -
第20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21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22题：
(ii) The recoverability of the deferred tax asset. (4 marks)
正确答案：
(ii) Principal audit procedures – recoverability of deferred tax asset
– Obtain a copy of Bluebell Co’s current tax computation and deferred tax calculations and agree figures to any
relevant tax correspondence and/or underlying accounting records.
– Develop an independent expectation of the estimate to corroborate the reasonableness of management’s estimate.
– Obtain forecasts of profitability and agree that there is sufficient forecast taxable profit available for the losses to be
offset against. Evaluate the assumptions used in the forecast against business understanding. In particular consider
assumptions regarding the growth rate of taxable profit in light of the underlying detrimental trend in profit before
tax.
– Assess the time period it will take to generate sufficient profits to utilise the tax losses. If it is going to take a number
of years to generate such profits, it may be that the recognition of the asset should be restricted.
– Using tax correspondence, verify that there is no restriction on the ability of Bluebell Co to carry the losses forward
and to use the losses against future taxable profits.
Tutorial note: in many tax jurisdictions losses can only be carried forward to be utilised against profits generated
from the same trade. Although in the scenario there is no evidence of such a change in trade, or indeed any kind
of restriction on the use of losses, it is still a valid audit procedure to verify that this is the case -
第23题：
Chip, a single individual has two sales of stock during the current year. The first sale produces a short-term loss of $10,000 and the second sale results in a long-term gain of $40,000. Chip's taxable income without considering the gain is $150,000. Chip's stock transactions will increase his income tax liability by:()。
A、$3,000
B、$4,500
C、$6,600
D、$7,200
E、$9,000
答案：B