Adv. Taxation NI
2nd Year Paper
August 2015
Advanced Taxation (Northern Ireland)
2nd Year Examination
August 2015
Solutions & Marking Scheme & Examiner’s Comments
Page 1 of 23
Adv. Taxation NI A2015
Adv. Taxation NI
2nd Year Paper
August 2015
NOTES TO USERS ABOUT THESE SOLUTIONS
The solutions in this document are published by Accounting Technicians Ireland. They are intended to
provide guidance to students and their teachers regarding possible answers to questions in our
examinations.
Although they are published by us, we do not necessarily endorse these solutions or agree with the
views expressed by their authors.
There are often many possible approaches to the solution of questions in professional examinations. It
should not be assumed that the approach adopted in these solutions is the ideal or the one preferred by
us. Alternative answers will be marked on their own merits.
This publication is intended to serve as an educational aid. For this reason, the published solutions will
often be significantly longer than would be expected of a candidate in an examination. This will be
particularly the case where discursive answers are involved.
This publication is copyright 2015 and may not be reproduced without permission of Accounting
Technicians Ireland.
© Accounting Technicians Ireland, 2015.
Page 2 of 23
Adv. Taxation NI A2015
Adv. Taxation NI
2nd Year Paper
August 2015
Accounting Technicians Ireland
2nd Year Examination: Autumn 2015
Paper: ADVANCED TAXATION (Northern Ireland)
Thursday 13 August 2015
2.30 p.m. to 5.30 p.m.
INSTRUCTIONS TO CANDIDATES
PLEASE READ CAREFULLY
For candidates answering in accordance with the law and practice of Northern Ireland.
Candidates should answer the paper in accordance with the appropriate provisions up to and
including the Finance Act, 2014. The provisions of the Finance Act, 2015 should be ignored.
Allowances and rates of taxation, to be used by candidates, are set out in a separate booklet
supplied with the examination paper.
Answer ALL THREE QUESTIONS in Section A, and ANY TWO of the FOUR questions in
Section B. If more than TWO questions are answered in Section B, then only the first two
questions, in the order filed, will be corrected.
Candidates should allocate their time carefully.
All workings should be shown.
All figures should be labelled as appropriate e.g. £s, units, etc.
Answers should be illustrated with examples, where appropriate.
Question 1 begins on Page 2 overleaf.
The following insert is included with this paper.

Tax Reference Material (NI)
Page 3 of 23
Adv. Taxation NI A2015
Adv. Taxation NI
2nd Year Paper
August 2015
SECTION A
Answer QUESTION 1 and QUESTION 2 and QUESTION 3 (Compulsory) in this Section
QUESTION 1 (Compulsory)
John
It is August 2015 and John, a new client and higher rate taxpayer, has come into the office for some
information as he is worried about his ability to meet his future tax liabilities. He has also told you that
he did not include on the relevant income tax return £6,000 of income that he received in 2013/14. He
does not know if he is too late to notify HMRC about the omission and what the consequences of
telling HMRC or keeping quiet about it could be.
The payments to date this year have been as follows:PAID 31-01-2015
£
2013/14 Balancing Payment
2014/15 1st POA
18,250
14,625
32,875
PAID 31-07-2015
£
2014/15 2nd POA
14,625
You have completed the draft tax computation for him for 2014/15 and calculate the total Income Tax
payable for the tax year will be £30,800. In addition the Capital Gains Tax for 2014/15 is estimated to
be £12,575.
REQUIRED
i.
Explain the amounts that will be payable on 31-01-2016 and 31-07-2016 and how they are
calculated.
10 marks
ii.
Explain briefly the implications of not making these payments when due.
iii.
Explain the deadlines to John and the main implications of either notifying HMRC now
or of failing to notify HMRC of the undeclared income of £6,000.
6 marks
4 marks
Total 20 Marks
Page 4 of 23
Adv. Taxation NI A2015
Adv. Taxation NI
2nd Year Paper
August 2015
QUESTION 2 (Compulsory)
Spratt Limited
Spratt Limited a UK registered company with no associates commenced trading on the 1 st December
2013 and has produced a set of financial accounts for a 16 months period ended 31-03-2015. The draft
financial accounts before publication for the 16 months to 31-03-2015 are as follows:
£
Sales
Less cost of sales
Gross Profit
ADD: Other Income
Discount Received
Rental Income (note 1)
Interest Received
from Investments
Profit on Sale of
Assets (note 2)
Bad Debts Recovered
Dividends Received
from UK Co (note 3)
£
3,221,300
(1,706,500)
1,514,800
7,800
72,000
117,006
128,702
31,004
58,500
315,012
1,829,812
Less Expenses
Salaries and Wages
Rent, Rates and Insurance
Depreciation
General Administrative
Expenses (note 4)
Interest Payable
Bad Debt written off
Selling Expenses (note 5)
751,350
110,120
111,000
176,193
91,306
136,400
161,500
(1,537,869)
291,943
NET PROFIT
Page 5 of 23
Adv. Taxation NI A2015
Adv. Taxation NI
2nd Year Paper
August 2015
NOTES
1. Rental Income accrues at £4,500pm.
2. Profit on Sale of Assets relate to the profit made on a number of
disposals during the period of accounting. These have resulted in
Chargeable Gains of Disposals as follows:
Disposal made 12-06-2014
Disposal made 15-02-2015
£52,400
£41,000
3. Dividends received from UK Companies is the net income received from UK
Companies on 30-06-2014.
4. General administrative expenses include the following:
Loan to Employee written off
Increase in Specific Bad Debt Provision
Increase in General Bad Debt Provision
Gift Aid Payment (paid 30-09-2014)
5. Selling expenses include the following:
Entertaining Customers
Gifts of diaries to customers
(@ £6 each with Company logo)
£1,200
£10,920
£30,036
£30,000
£11,930
£6,000
6. Capital Allowances have been calculated
and agreed as follows:
01-12-2013 to 30-11-2014
4 m/e 31-03-2015
£81,000
£24,500
REQUIRED
Calculate the Corporation Tax Liability for all Chargeable Accounting Periods.
Total 20 Marks
Page 6 of 23
Adv. Taxation NI A2015
Adv. Taxation NI
2nd Year Paper
August 2015
QUESTION 3 (Compulsory)
Maeve
Maeve runs her own business and prepares accounts to 30 th September each year. In the year to 30th
September 2014, Maeve has found that the business has expanded rapidly and as a consequence she
has invested heavily in assets for the business as follows:
Date
07-11-2013
14-01-2014
15-02-2014
12-08-2014
Plant & Machinery
£
75,500
62,400
153,750
20,250
Motor Vehicles
£
18,500
27,230
9,275
15,300
(CO2 emissions 90g/km)
(CO2 emissions 175 g/km)
(CO2 emissions 140 g/km)
(CO2 emissions 122g/km + 30%
private use)
During the year Plant and Machinery was disposed of for £14,625 that had cost £22,525 in the
previous year.
Written down values brought forward on 1st October 2013 were as follows:
Main pool £46,724
Special rate pool £18,293
REQUIRED
Calculate the capital allowances that Maeve is entitled to claim.
Total 20 Marks
Page 7 of 23
Adv. Taxation NI A2015
Adv. Taxation NI
2nd Year Paper
August 2015
SECTION B
Answer ANY TWO of the FOUR questions in Section B
QUESTION 4
a)
In 2014/15 Nuala has the following income and expenses:Gross Taxable Income
Personal Pension per month
Gift Aid Donation (one off)
£125,000
£1,250
£5,900
REQUIRED
i)
Calculate the personal allowance claimable by Nuala in 2014/15.
3 marks
ii)
b)
Calculate Nuala’s Income Tax Liability for 2014/15.
3 marks
Delta Ltd a close company with a year end of 31 st October pays Corporation Tax at the small
company’s rate 20%. On 30th April 2013 Delta Ltd made a loan of £45,000 to Donna a higher
rate taxpayer and shareholder of the company at the official rate of interest 3.25%. On the 31 st
March 2015 Delta Ltd wrote off the loan.
REQUIRED
Outline the tax consequences if any of this transaction.
i) On Delta Ltd at the time the loan is made.
2 marks
ii) On Donna at the time when the loan is written off.
2 marks
c)
Paul is employed as a special consultant with a security firm Axle Ltd and has a salary of
£32,000pa. He makes a contribution of 5% of his salary to the Approved Company Pension
scheme and Axle Ltd make a further 8% contribution as employer.
During the year Paul is required to stay in accommodation provided by Axle Ltd. This
accommodation has an annual value of £3,600 but has been agreed with HMRC that it could
be considered “job related” accommodation for tax purposes. Furniture with a market value of
£2,200 has been provided in the house and other bills paid by Axle Ltd on Paul’s behalf have
amounted to £3,400.
As a bonus this year Paul was given vouchers to spend on a holiday with a local travel agent.
The retail value of the vouchers was £1,500 but they cost Axle Ltd £1,250.
Paul is required to use his own car for occasional business use for which the company agreed
to reimburse him at a rate of 55p per mile. During the 2014/15 year he travelled 7,500
business miles. Paul has also made payments in the year of £175 (on approved professional
subscription) and a further £30pm to Oxfam under the Payroll Giving Scheme,
organized by Axle Ltd. This amount is deducted each month from his salary.
REQUIRED
Calculate the assessable amount of employment income for Paul in the 2014/15 year.
10 marks
Total 20 Marks
Page 8 of 23
Adv. Taxation NI A2015
Adv. Taxation NI
August 2015
2nd Year Paper
QUESTION 5
Alice
Alice has decided that she would dispose of a number of significant assets that she has held for some
time. Details of the cost, disposal value and other relevant information is as follows:
Asset
Disposal of
piece of land
Antique
Painting
Antique
Necklace
Aston Martin
DB9
Disposal
Proceeds
£
£30,000
Cost
£
Other Information
£50,000
Value of remaining land £120,000
£20,000
£5,000
Additional restoration cost in 1995
amounted to £6,000
£Nil Gift
£5,000
The necklace was gifted to her sister
June on the occasion of her 60th
birthday. At the time of the gift it
had been valued at £8,000
£18,000
£6,000
Alice has also spent £10,000 having
the car professionally restored.
On 31-12-2014 Alice also disposed of her house for £470,000. The house had been bought for £80,000
on 01-01-1988. Her use of the house was as follows:
01-01-1988 to 31-12-1997
01-01-1998 to 31-12-1999
01-01-2000 to 31-12-2008
01-01-2009 to 31-12-2014
Occupied by Alice as her principle private residence
(PPR).
Rented out as Alice was on a 2year trip to Australia
Occupied by Alice as her PPR
Rented out as Alice had moved elsewhere
REQUIRED
Calculate the total Capital Gains Tax payable by Alice in the 2014/2015 year assuming that her other
taxable income in the year amounted to £30,000.
Total 20 Marks
Page 9 of 23
Adv. Taxation NI A2015
Adv. Taxation NI
August 2015
2nd Year Paper
QUESTION 6
Downton Boilers Ltd
Downton Boilers Limited operates a UK based business for the maintenance, installation and repairs of
domestic boilers. A significant amount of the parts that the company buy are bought from a VAT
registered German supplier. The company accounts for VAT on the normal invoice basis. The
following relates to transactions undertaken in the quarter ended 31 st December 2014. All figures are
exclusive of VAT unless otherwise stated.
SALES/SERVICE
£
28,953
1,745
1,945
268
Sales/service invoiced in the UK (note 1)
Sales/services to non-registered EU customers
Cash sales
Credit notes issued
PURCHASES/EXPENSES
Purchases of materials/equipment in UK
Purchases of materials imported from EU
VAT- registered suppliers
Purchases of motor van (note 2)
Wages and salaries
Rent (note 3)
Telephone
Insurance
Bad debts (note 4)
Other standard rated expenses (note 5)
7,917
4,125
14,000
8,450
2,500
642
1,800
2,496
4,720
NOTES
1. Sales/services carried out in the UK are all standard rated. The company offers discount of 5% for
prompt payment and it is estimated that this is taken up by 80% of its customers.
2. A new company van was purchased in October 2014 at a cost of £14,000 (net of a trade-in
allowance on the old van of £8,000). Both these amounts are VAT inclusive.
3. The ‘option to tax’ has been exercised by the landlord.
4. Bad debts written off as irrecoverable debts this quarter are in respect of two UK customers for
invoices (inc VAT) of £1,080 (due for payment March 2014) and £1,416 (due for payment
September 2014).
5. Other standard rated expenses include fuel costs of £500 for petrol for a company car driven by one
of the directors. The car has CO2 emissions of 205 g/km. It is estimated that the director uses the
vehicle 80% for business use.
6.
No account has been taken for a boiler that has been taken from stock and given at no charge to a
customer who was a friend of one of the directors. The company normally sells the products for
£840 (exc VAT). The company has a normal mark up on such products of 40%.
REQUIRED
Calculate the VAT Payable or Repayable by the company for the Q/E 31 December 2014
Total 20 Marks
Page 10 of 23
Adv. Taxation NI A2015
Adv. Taxation NI
2nd Year Paper
August 2015
QUESTION 7
Quik-Text Ltd has been trading for many years and preparing accounts to 31 st March each year. It has
changed its accounting date to 31st December now and results for the last Periods of Account have been
as follows:
Trade Profit/(loss)
Rental Income
Interest Income
Chargeable Gain/(loss)
Charitable Donation
Y/E
31-03-12
£
35,625
2,250
3,450
0
12,000
Y/E
31-03-13
£
62,550
3,450
4,750
(2,000)
18,000
9 M/E
31-12-13
£
43,500
2,250
4,500
4,500
13,500
12 M/E
31-12-14
£
(166,500)
6,000
18,000
REQUIRED
i.
Compute the taxable profits for each of the relevant accounting periods on the assumption that the
company makes all available loss claims against the earliest possible profits.
14 marks
ii.
Show any unrelieved charges there may be in years affected.
4 marks
iii.
State (but do not re-calculate) what difference it would make if the trade loss incurred in the 12
m/e 31-12-14 was the last 12 months of trading.
2 marks
Total 20 Marks

Page 11 of 23
Adv. Taxation NI A2015
Adv. Taxation NI
2nd Year Paper
August 2015
2nd Year Examination: August 2015
Adv. Taxation (Northern Ireland)
Suggested Solutions
and
Examiner’s Comments
Students please note: These are suggested solutions only; alternative answers may also be deemed to
be correct and will be marked on their own merits.
Statistical Analysis – By Question
Question No.
Average Mark
(%)
Nos.
Attempting
1
39
2
44
3
65
4
32
5
54
6
42
7
52
48
48
48
35
16
26
19
Statistical Analysis - Overall
59%
Pass Rate
47%
Average Mark
Range of Marks
Nos. of Students
0-39
9
40-49
15
50-59
18
60-69
4
70 and over
1
Total No. Sitting Exam
47
10
Total Absent
2
Total Approved Absent
59
Total No. Applied for Exam
General Comments:
This sitting of examination saw a significant drop in the percentage passing (48% ) compared to August
2014 (58%). This was to a large degree as a consequence of the poor marks achieved in compulsory
questions 1 and 2 with an average marks of 39% and 44% respectively.
Candidates must ensure that when 60% of these papers are compulsory questions they do not present
themselves for examination with significant gaps in their knowledge base.
Page 12 of 23
Adv. Taxation NI A2015
Adv. Taxation NI
2nd Year Paper
August 2015
Examiner’s Comments on Question One
As mentioned this question was very badly answered by a number of candidates. It is most important
that candidates are able to calculate an Outstanding IT liability and payments on Account. Payments
due on 31/1 each year take account of the IT liability Less any POA that have been made Plus any
CGT due plus POA in respect of the following year.
POA will be calculated as 50% of last year’s IT liability and must include any Class 4 NIC but
exclude CGT. Calculation of penalties and interest on late payments should use the figures in the
question given
Question 1 John
i)
Payment Due:
Income Tax Liability 2014/15
30,800
Total
Marks
Allocated
2
Less Payments on Account
-29,250
2
Add C.G.T. due 2014/15
12,575
31/01/2016
£
1,550
2
14,125
Add 1st Payment on A/C 2014/15
(50% x 2014/15)
15,400
2
29,525
31/07/2016
2nd Payment on A/C 2015/16
15,400
2
10
Note: There will be no Payment on A/C relating to Capital Gains Tax.
ii) If payments are late Interest will be due at a rate of 3.25% p.a.
Penalties for late payments are as follows:
30 days – 60 months 5% of tax (eg (5% x 29,525 = £1,47625)
>6 months a further 5% penalty will arise
>12 months a further 5% penalty will arise
4
iii) The income should have been recorded on the 2013/14 tax
return due on 31-01-2015. Changes can be made to a tax return up to 1 year
after the deadline without having to make a formal written application to
HMRC.
Page 13 of 23
2
Adv. Taxation NI A2015
Adv. Taxation NI
2nd Year Paper
August 2015
John therefore can declare this income before 31-01-2016. As a higher rate
taxpayer he will owe £2,400 additional Income
Tax on this (40% x £6,000).
2
There could be a penalty of up to 30% of the extra tax if the
1
omission is considered careless, or 70% if the omission was deliberate.
If John choose not to notify HMRC about the omission and
it is subsequently discovered the penalty could be up to 100% of the
additional tax.
1
6
Examiner’s Comments on Question Two
The calculation of a CT liability on a long Accounting period must be a basic knowledge point that
candidates should familiarise themselves with. In particular note;
1. Do the Adjusted profits computation first for the full 18m period and
2. Apportion Profits as required 12/18 and 6/18
3. All other deuctions and Income apportion as it arises
Question 2
Spratt Limited
WORKINGS
Adjusted
Profits computation
1
Total
Marks
Allocated
£
Net Profit per accounts
291,943
1½
Less income assessable elsewhere
Rental Income
72,000
1
Interest Received
117,006
1
Profit on Sale
128,702
1
Dividends received
58,500
1
376,208
84,265
Add: Disallowable Expenses
General Admin Depreciation
111,000
1
Increase in General Bad Debt
30,036
1
Page 14 of 23
Adv. Taxation NI A2015
Adv. Taxation NI
2nd Year Paper
August 2015
Gift Aid Payment
30,000
2
Selling expenses
Entertaining Customers
11,930
1
182,96
6
Adjusted Profits before CA
98,701
9½
01-12-2013 to 30-112014
£
74,026
4 m/e 31-032015
£
24,675
1
-81,000
-24,500
0.5
Chargeable Accounting
Periods:
Adjusted Profits (12/16, 4/16)
Less Capital Allowances
Trade Profits
-6,974
175
1
Chargeable Gains
52,400
41,000
1
Interest Income
87,754
29,252
0.5
Rental Income
54,000
18,000
0.5
187,180
88,427
Less Charges on Income
-30,000
-
PCTCT
157,180
88,427
65,000
-
Profits
222,180
88,427
Lower Limit
300,000
100,000
Upper Limit
1,500,000
500,000
£31,436.00
£17,685.40
Add FII (
58,500
/0.90)
2
2
SCR Applies
CT Payable @20%
1
20
Examiner’s Comments on Question Three
I am delighted to report that by in large this question was well answered by all candidates and that the
topic and rules relating to Capital Allowance were well known and applied correctly. Candidates
should note marks will be awarded for correct categorization of asset types, identifying those eligible
for AIA and the appropriate identification of assets attracting WDA @ 18% or 8%.
Page 15 of 23
Adv. Taxation NI A2015
Adv. Taxation NI
2nd Year Paper
August 2015
Question 3 Maeve
9. Maeve Capital Allowances Claim
WDV BIF
Additions Qualifying for FYA
FYA
AIA
£
£
General PoolSpecial Rate Single Asset Private Use (30%)Capital Allowance
Pool
Pool
Claim
£
£
£
£
£
46,724
18,293
18,500
18,500
Additions not Qualifying for AIA
(CO2 175 g/km)
(CO2 140 g/km)
CO2 122 g/km
27,230
9,275
15,300
Additions qualifying for AIA
07.11.2013
11.01.2014
05.02.2014
8.2014???
75,500
62,400
153,750
20,250
311,900
-270,250
AIA (WI)
270,250
41,650
88,374
(14,625)
73,749
Disposal
WDA @ 18%
WDA @ 8%
(13275)
WDV CIF
60,474
54,798
15,300
(2,754)
826
(4,384)
50,414
15,203
4,834
12,546
Total Capital Allowance Claim
308,337
Workings
1. Maximum AIA
01-10-2013 - 05-04-2014
6/12 X 250,000 = 125, 000
06-04-2014 - 30-09-2014
6/12 X 500,000 = 250, 000
Maximum AIA Total £375,000
The maximum eligible expenditure in 1-10-20135-4-2014 is £250,000.
Expenditure incurred
07/01/2013 75,500
14/01/2014 62,400
15/02/2014 153,750
291,650
Eligible Expenditure
250,000
12/08/2014 20,250
270,250
Total 20 marks
Page 16 of 23
Adv. Taxation NI A2015
Adv. Taxation NI
August 2015
2nd Year Paper
Examiner’s Comments on Question Four
A lot of candidates chose to do this question in Section B but sadly simply did not know the relevant
rules relating specifically to Personal Allowances and Adjusted Net Income calculation in part 1 and
the rules relating to Close companies part 2.
The calculation of BIK for Paul however was generally well answered
Question 4
1)
Nuala
i)
Personal Allowance Claimable
Adjusted Net Income
Total
Marks
Allocated
£
Gross Taxable
125,000
½
-18,750
1
-7,375
1
Less Personal Pension (Gross)
1,250 x 12
/0.80
Less Gift Aid (Gross)
5,900
/0.80
Adjusted Net Income (ANI)
98,875
As ANI < £100,000 Nuala will be entitled to claim full
½
Personal Allowance of £10,000.
ii)
Income Tax Computation 2014/15
£
Gross Taxable
125,000
½
Less PA (as above)
-10,000
½
115,000
Basic Rate Band
31,865
Add Gross Personal Pension
18,750
1
Gross Gift Aid
7,375
1
Extended Basic Rate
57,990
Income Tax due
Page 17 of 23
£
Adv. Taxation NI A2015
Adv. Taxation NI
2)
August 2015
2nd Year Paper
57,990 x 20%
11,598
57,010 x 40%
22,804
115,000 I T Liability 2014/15
34,402
Delta Limited
Delta Ltd must make a payment of £11,250
(ie. £45,000 x25%) to HMRC. This will be payable
at the same time as the Corporation Tax for the
Accounting Period in which the loan was made.
ie. AP ending period 31st October 2013 so it is
payable by 1st August 2014.
2
When the loan is written off Donna will be deemed
to have received dividend income of £50,000
(45,000
/0.90) and as a higher rate tax payer she
will be subject to additional tax of £11,250
(ie. 50,000 x 22½%).
2
Paul Assessable Employment Income 2014/15
£
GROSS SALARY
32,000
Less 5% Pension contribution
-1,600
1
Payroll Giving Oxfam
-360
1
Net taxable for PAYE
30,040
ADD benefits
Accommodation*
Bills only as job related Limited to 10%
3,040
2
750
1
Holiday Vouchers – cost to Employer
1,250
1
Less allowable deduction - Professional Subs
-175
1
Excess Mileage (7,500 x 55-45p)
34,905
Note:Axle’s contribution to the Pension scheme (8%) is not
included as a benefit.
1
*Accommodation Benefit
Bills paid on behalf
Furniture (20% x 2,000)
Page 18 of 23
3,400
1
440
1
3,840
10
Adv. Taxation NI A2015
Adv. Taxation NI
2nd Year Paper
August 2015
Examiner’s Comments on Question Five
This question was well answered by most candidates who chose to do so. At this level it is pleasing to
note that students know and apply the rules for CGT on individuals well.
Question 5 Alice
a)
Alice Capital Gains Tax Chargeable Disposals 2014/15
£
i) LAND: PART DISPOSAL
Proceeds
Less Apportioned cost
Chargeable
£
Total
Marks
Allocated
30,000
50,000 x 30,000
/30,000 + 120,000
Gain
ii) ANTIQUE PAINTING
Proceeds
Less cost
Restoration
iii) GIFT TO SISTER
Deemed Proceeds (MV)
Less costs
Gain
Limited to 5/3 x (8,000-6,000) = 3,333
(10,000)
20,000
20,000
2
20,000
(5,000)
(6,000)
9,000
9,000
2
8,000
(5,000)
3,000
3,000
3
iv) ASTON MARTIN DB9 Exempt Asset
-
b)
Disposal of Principal Private Residence will be subject to
partial charge ie.
Absence in Australia will be considered to be a period of
deemed occupation under the absence for any reason rule since
it is for less than 3 years and is both preceded and succeeded
by periods of actual occupation.
2
2
18m of the final 6 years of absence will count as deemed
occupation as it was occupied as a
Principle Private Residence. The remaining 4½ years of
absence in this last period will be chargeable.
1
£
Proceeds
470,000
Less cost
-80,000
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Adv. Taxation NI A2015
Adv. Taxation NI
2nd Year Paper
August 2015
Gain
Chargeable 390,000 x
4.5
/27
=
GAINS SUMMARY
i) Land
£
20,000
ii) Antique Painting
9,000
iii) Gift
3,000
iv) Aston Martin
390,000
1
65,000
2
-
v) PPR
65,000
Total Gains
97,000
Less Annual Exemption
-11,000
Taxable
86,000
Other Taxable Income
30,000
1
Capital Gains Tax
1,865 x 18% =
335.7
2
84,135 x 28% =
23,557.80
2
86,000
23,893.50
20
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Adv. Taxation NI A2015
Adv. Taxation NI
2nd Year Paper
August 2015
Examiner’s Comments on Question Six
There were a couple of issues in this question that candidates should review carefully. In particular
note
1. the rules on the VAT charge where discount is offered to customers
2. treatment of the VAT on sale of assets
3. treatment of the VAT on asset purchases where a trade in has been offered
VAT Return Q/E 31st December 2014
OUTPUT TAX
Sales/Services in the UK (28,953 x 95% x 20%)
£
Total
Marks
Allocated
5,501.07
2
349
2
Sales/Services to non-registered EU
Customers (1,745 x 20%)
Cash Sales (1,945 x 20%)
389
1
Credit Notes Issued (268 x 20%)
-53.6
2
EU Acquisitions (4,125 x 20%)
825
1
80.83
2
120
2
Deemed supplies
Fuel Scale charge (485 x1/6)
Gift to customer (840/1.40 x 20%)
7,211.30
INPUT TAX
Purchase of materials/equipment in
UK (7,917 x 20%)
1,583.40
1
Purchase of motor van (22,000 x 20%)
4,400.00
2
Rent (2,500 x 20%)
500
2
Bad Debts (1,080 x 20%)
216
2
Other Standard Rates expenses
944
1
7,642.40
432.1
20
Page 21 of 23
Adv. Taxation NI A2015
Adv. Taxation NI
2nd Year Paper
August 2015
Examiner’s Comments on Question Seven
Candidates answering this question did so well. The only point of note is that even those who
answered the treatment of losses well they often failed to answer part ii to the question ie “Show any
unrelieved charges there may be in years affected” which was worth 4 marks!
Question 7 Quik-Text Limited
31-03-2012
35,625
2,250
3,450
0
41,325
41,325
41,325
(12,000)
29,325
31-03-2013
62,550
3,450
4,750
70,750
70,750
(17,687)
53,063
(18,000)
35,063
31-12-2013
43,500
2,250
4,500
2,500
52,750
52,750
(52,750)
0
0
0
Marks
TOTAL MARKS
4
4
4
2
14
ii) Unrelieved Charges
0
0
13,500
18,000
Marks
TOTAL MARKS
1
1
1
1
4
Trade Profit
Rental Income
Interest Income
Chargeable Gains
Total Profits
Less c/y Loss Relief
Less c/b Losses
Less Charitable Donation
PCTCT
Loss Memo
Loss y/e 31-12-2014
c/y Loss Relief
31-12-2014
0
6,000
6,000
(6,000)
0
0
0
0
£
166,500
-6,000
160,600
-52,750
107,750
-17,687
90,063
c/b 9 m/e 31-12-2013
Loss avail c/b
Loss c/b 3m (70,750 x 3/12)
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Adv. Taxation NI A2015
Adv. Taxation NI
August 2015
2nd Year Paper
ii)
A loss incurred in the final 12 months of trading can
be carried back and relieved against total profits of the 36
months preceding the loss making period on a LIFO basis.
The carry back operates in the same way as the normal
c/b loss relief ie. set off against total profits of the 36 months.
Where it includes c/b to a short accounting period
apportionment will be required.
2
TOTAL MARKS
20
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Adv. Taxation NI A2015