Taxation (TX UK)
March/June 2022
Examiner’s report
The examining team share their observations from the
marking process to highlight strengths and
weaknesses in candidates’ performance, and to offer
constructive advice for those sitting the exam in the
future.
Contents
General comments .............................................................. 2
Section A ............................................................................. 2
Example 1 ........................................................................ 3
Example 2 ........................................................................ 4
Example 3 ........................................................................ 4
Example 4 ........................................................................ 5
Section B ............................................................................. 6
Question 1 ........................................................................ 7
Question 2 ........................................................................ 7
Question 3 ........................................................................ 8
Question 4 ........................................................................ 8
Question 5 ........................................................................ 9
Section C ........................................................................... 10
Fleur ............................................................................... 10
Requirement (a) – 10 marks ...................................... 10
Poppy ............................................................................. 11
Requirement (a) – 10 marks ...................................... 12
Requirement (b) – 2 marks ........................................ 13
Requirement (c) – 3 marks ......................................... 13
Mixture Ltd ..................................................................... 14
Requirement (a)(i) – 2 marks ..................................... 14
Requirement (a)(ii) – 3 marks .................................... 15
Requirement (b) – 4 marks ........................................ 15
Requirement (c) – 2 marks ......................................... 16
Examiner’s report – TX-UK March/June 2022
Requirement (d) – 4 marks ........................................ 16
1
General comments
This examiner’s report should be used in conjunction with the published March/June sample
exam which can be found on the ACCA Practice Platform.
In this report, the examining team provide constructive guidance on how to answer the
questions whilst sharing their observations from the marking process, highlighting the
strengths and weaknesses of candidates who attempted these questions. Future candidates
can use this examiner’s report as part of their exam preparation, attempting question
practice on the ACCA Practice Platform, reviewing the published answers alongside this
report.
The Taxation (TX-UK) exam is offered as a computer-based exam (CBE). The model of
delivery for the CBE exam means that candidates do not all receive the same set of questions.
In this report, the examining team share their observations from the marking process to
highlight strengths and weaknesses in candidates’ performance, and to offer constructive
advice for future candidates.
•
•
•
Section A objective test questions – four specific questions from this sitting of the
exam.
Section B objective test case questions – a detailed review of one case from section
B.
Section C constructed response questions - guidance on how to complete all published
CR questions from the sample exam
Section A
Section A questions aim to provide a broad coverage of the syllabus, and future candidates
should aim to revise all areas of the TX-UK syllabus, rather than attempting to question spot.
The following four questions are reviewed with the aim of giving future candidates an indication
of the types of questions asked, guidance on dealing with exam questions and to provide a
technical debrief on the topics covered by the specific questions selected.
Examiner’s report – TX-UK March/June 2022
2
Example 1
Hassan filed his self-assessment tax return for the tax year 2019-20 on 31 August 2021. The
return showed a tax liability of £6,200, which Hassan paid in full on 31 August 2021.
Which THREE of the following penalties could Hassan be charged in respect of the
late filing of his self-assessment tax return?
Options:
£100 fixed penalty
£900 of daily penalties
£200 fixed penalty
£310 tax geared penalty
£620 tax geared penalty
£2,120 of daily penalties
This question tests syllabus area A.6.a Calculate late payment interest and state the
penalties that can be charged.
The correct three options are - £100 fixed penalty, £900 of daily penalties (90 days at
£10 per day because of the failure to file exceeding three months) plus £310 tax geared
penalty (being £6,200 at 5% because the failure continued after six months and is greater
that £300).
The incorrect choices were:
£200 fixed penalty being two lots of £100 late filing
£620 tax geared penalty (being £6,200 at 10%) and
£2,120 of daily penalties (being £10 per day for 212 days 1 Feb 2021 to 31 Aug
2021)
Examiner’s report – TX-UK March/June 2022
3
Example 2
Jack is registered for value added tax (VAT) and has just joined the flat rate scheme. His
standard rated sales are £10,000 per month and his standard rated purchases are £7,000
per month. Both of these amounts are exclusive of VAT.
The relevant flat rate percentage for Jack's business is 8%. The percentage reduction for the
first year of VAT registration is not available.
What is Jack's monthly VAT liability under the flat rate scheme?
£ ____________
This question tests syllabus area F3.a.iii Flat rate scheme
The correct answer is 960
The flat rate percentage is applied to the tax inclusive turnover. In this case that is the
standard rated sales of £10,000 plus 20% VAT (£12,000), at 8% giving VAT of £960.
Example 3
Zen Ltd has the following holdings of ordinary shares in other companies:
100% of Abe Inc, a company that is resident overseas
80% of Bel Ltd, a UK resident company
40% of Can Ltd, a UK resident company
Zen Ltd has held the shares in Abe Inc and Can Ltd for many years, but only acquired its
shareholding in Bel Ltd on 1 March 2022.
Zen Ltd paid its corporation tax liability for the year ended 31 March 2021 by quarterly
instalment payments, and its profits for the year ended 31 March 2022 are £1,200,000.
What is the relevant profit threshold for determining whether Zen Ltd will have to pay
its corporation tax by quarterly instalment payments for the year ended 31 March
2022?
Options:
£750,000
£1,500,000
£375,000
£500,000
This question tests syllabus area A.4.c. - Explain how large companies are required to
account for corporation tax on a quarterly basis and compute the quarterly instalment
payments
Examiner’s report – TX-UK March/June 2022
4
The correct answer is £750,000. The 51% group companies are Zen Ltd and Abe Inc, so
1,500,000/2 = £750,000.
Zen Ltd has 51% interest in Abe Inc and Bel Ltd but not in Can Ltd. However, because the
shareholding in Bel Ltd was not acquired until 1 March 2022, there are only two 51% group
companies at the end of the immediately preceding accounting period (the year ended 31
March 2021) ; Zen Ltd and Abe Inc. The threshold of £1,500,000 is therefore divided by two
giving £750,000.
The incorrect options are:
£1.5 million - being the total threshold
£375,000 – being £1.5m divided by all four companies
£500,000 – being £1.5m divided by three companies
Example 4
Brian had the following income and chargeable gains for the tax year 2021-22:
Employment income
Chargeable gain from the sale of an antique vase
£43,000
£18,000
What is Brian's capital gains tax liability for the tax year 2021-22?
Options:
£2,873
£3,600
£570
£1,140
This question tests syllabus area C.5.a. Compute the amount of capital gains tax payable
The correct answer is £570.
Brian has £7,270 of basic rate band available after taking account of his employment income
(£43,000 less £12,570 = £30,430 of the basic rate band of £37,700 has been used up
leaving £7,270).
Brian’s chargeable gain is £18,000 against which his annual exempt amount of £12,300 will
be deducted leaving a taxable capital gain of £5,700. As all of this falls within the remaining
basic rate band of £7,270 then the £5,700 is taxed at 10% (the lower rate for capital gains
tax) resulting in tax of £570.
The other incorrect options are calculated as follows:
£2,873 is the full chargeable gain of £18,000 (no annual exempt amount given) taxed
at 10% for £7,270 and £10,730 at 20%;
£3,600 is the full chargeable gain of £18,000 taxed at 20%; and
£1,140 is the taxable gain (£18,000 less annual exemption £12,300) at 20% the
higher rate of CGT.
Examiner’s report – TX-UK March/June 2022
5
Section B
Section B tests candidates’ knowledge on a specific tax in more depth. There are three cases
each with five related objective test (OT) questions for 2 marks each.
Case questions will examine a single tax in the context of a given scenario and will cover a
variety of different aspects of that particular tax. Therefore, candidates must be able to apply
their knowledge of that tax to the specific scenario to be able to score well.
Each question is independent of the other questions in the case and each question will
generally follow the order of the case scenario.
Example of a case scenario
Nagina and Rishi were a married couple. They made three lifetime gifts before Nagina died
on 26 June 2021.
Rishi
On 16 April 2015, Rishi made a chargeable lifetime transfer to a trust. The amount of the gift
was £355,000 after deducting all available exemptions. Rishi agreed to pay any inheritance
tax on the gift.
On 10 January 2021, Rishi made a gift of 2,000 £1 ordinary shares in Altion Ltd to his son.
Before the transfer, Rishi owned 8,000 shares in Altion Ltd. Altion Ltd has an issued share
capital of 10,000 £1 ordinary shares.
The value of Altion Ltd's shares on 10 January 2021 were:
Holding
1% to 25%
26% to 50%
50% to 75%
75% to 100%
Value per share
£10
£14
£20
£30
The nil rate band for the tax year 2015-16 was £325,000.
These are the only lifetime gifts which Rishi has made.
Nagina
On 11 May 2018, Nagina made a potentially exempt transfer of £350,000 to her grandson as
a wedding gift when the grandson got married. This figure is after deducting all available
exemptions.
The nil rate band for the tax year 2018-19 was £325,000.
This is the only lifetime gift made by Nagina.
Examiner’s report – TX-UK March/June 2022
6
Question 1
What was the amount of the gross chargeable transfer in respect of Rishi's
chargeable lifetime transfer made to the trust on 16 April 2015?
£ ____________
This question tests D.2.a. of the syllabus Understand the tax implications of lifetime transfers
and compute the relevant liabilities
The correct answer is 362,500
When calculating lifetime tax the nil rate band at the date of gift should be used. Rishi has
agreed to pay the IHT, so the rate is 25% (being 20% of the gift plus the tax ie 20%x100/80).
Thus the chargeable lifetime transfer of £355,000 less NRB of £325,000 at 25% gives tax of
£7,500. This is the gross chargeable transfer being the value of the gift (after exemptions)
plus the tax paid.
£355,000 + £7,500 = £362,500
Question 2
For inheritance tax purposes, what was the amount of the transfer of value of Rishi's
gift of 2,000 ordinary shares in Altion Ltd?
Options:
£120,000
£20,000
£60,000
£180,000
This question tests D.1.c. of the syllabus Demonstrate the diminution in value principle
The correct answer is £120,000
Before the gift Rishi had 8,000 shares in Altion Ltd, a holding of 80%. Each of Rishi's shares
before the gift therefore had a value of £30 per share.
After the gift Rishi owned 6,000 shares in Altion Ltd, mean the holding had fallen to
60%. Each of his shares after the gift therefore had a value of £20 per share for IHT
Value of estate before gift
Value of estate after gift
Diminution in value
(£30 x 8,000)
(£20 x 6,000)
£240,000
(£120,000)
£120,000
The incorrect options are as follows:
£20,000 =2,000 shares gifted at a value of £10 per share (for a 20% holding)
£60,000 = 2,000 at a value of £30 (all valued at the 80% holding)
£180,000 = 8,000 at £30 less 6,000 at a 20% holding value of £10
Examiner’s report – TX-UK March/June 2022
7
Question 3
What is the total value of the exemptions which will have been deducted in calculating
the value of the potentially exempt transfer that Nagina made to her grandson on 11
May 2018?
Options:
£7,000
£6,000
£5,500
£8,500
This question tests D.3.a.iv. of the syllabus Gifts in consideration of marriage.
The correct answer is £8,500
As this was a gift made to her grandchild the marriage exemption available was £2,500. The
gift will also qualify for the annual exemptions for the tax year 2017-18 and 2016-17.
£2,500 + (2x £3,000) = £8,500
The incorrect options are:
£7,000 is the answer if a marriage allowance of only £1,000 is given
£6,000 is calculated by not allocating a marriage allowance
£5,500 is given if only the current year's annual exemption is claimed with £2,500
marriage allowance
Question 4
What is the amount of inheritance tax which will be payable in respect of the
potentially exempt transfer made to the grandson on 11 May 2018 as a result of
Nagina's death?
Options:
£8,000
£10,000
£140,000
£112,000
This question tests D.2.a. of the syllabus Understand the tax implications of lifetime transfers
and compute the relevant liabilities
The correct answer is £8,000
There were no previous chargeable transfers in the seven years before this gift so the full nil
rate band is available. As Nagina lived more than 3 years but less than 4 years from making
the gift, taper relief is available to reduce the tax. The available reduction here is 20%.
(PET of £350,000 less NRB of £325,000) at 40% = £10,000
Examiner’s report – TX-UK March/June 2022
8
Less (20% x £10,000) = £8,000
The incorrect options are as follows:
£10,000 is the answer before deduction of taper relief.
£140,000 is given by treating the nil rate band as not being available and not giving
taper relief (£350,000 @40% = £140,000)
£112,000 is given by treating the nil rate band as being unavailable but giving a
deduction for taper relief (£350,000 @ 40% x 80% = £112,000)
Question 5
Drag and drop the correct tokens from below to identify who is responsible for paying
the inheritance tax arising from the potentially exempt transfer made to the grandson
on 11 May 2018 as a result of Nagina's death, and when this tax will be payable.
Individuals
Responsible for payment
Date payable by
Grandson
Personal representatives of
Nagina’s estate
Dates
31 December 2021
26 December 2021
This question tests D.4.a. of the syllabus Identify who is responsible for the payment of
inheritance tax and the due date for payment of inheritance tax
The correct answer is
Death tax on lifetime gifts made by the deceased individual is paid by the recipient of the gift.
Thus, it is payable by the Grandson. It is due six months from the end of the month of
death, the end of the month of death was 30 June 2021 and therefore six months after this is
31 December 2021.
Death tax is payable by the executors of the estate only on the estate left by the deceased
individual.
Examiner’s report – TX-UK March/June 2022
9
Section C
Fleur
The 10-mark higher skills question involved Fleur, who was self-employed. Based on Fleur’s
current trading profit of £100,000, tax and national insurance contributions (NICs) figures were
provided for the year ending 5 April 2022 giving a comparison of her remaining self-employed
and against the business being incorporated. The conclusion being that there was no tax
advantage to incorporating Fleur’s business as the tax and NIC costs were higher. However,
Fleur had just signed a contract with a new customer and her revised forecast trading profit
for the year ending 5 April 2022 was going to increase by £35,000 to £135,000.
As is typical for the higher skills question, it is important to read the question and requirements
carefully. The recommendation was that full computations were only required for the two
income tax computations, with all other workings being carried out at the margin. Although
candidates were given marks if a full computation approach was taken throughout, such an
approach invariably takes longer.
Requirement (a) – 10 marks
Based on the increased tax adjusted trading profit of £135,000, calculate revised figures
for each of the seven tax and NICs figures already calculated for the year ending 5 April
2022, and show if there will be an overall cost or saving if Fleur incorporates the
business on 6 April 2021.
Provided candidates followed the guidance given, thinking carefully how to set out their
answers, the question was generally quite well answered. The class 2 and class 1 NIC figures
did not change with the new profit level, and candidates that did not appreciate this not only
wasted time, but often failed to pick up these easy marks.
For the self-employed alternative, net income was £135,000. Candidates should have
therefore appreciated that no personal allowance was available without the need to perform a
calculation.
Conversely, when it came to the incorporation alternative, the personal allowance was
sometimes not given at all despite net income being just £105,000.
Examiner’s report – TX-UK March/June 2022
10
The incorporation alternative often caused more problems. One issue was the inclusion of the
trading profit within the income tax computation. Even when the correct income was included,
some candidates did not apply the dividend income tax rates to the dividend income correctly;
many candidates not appreciating that the £2,000 dividend nil rate band counts towards the
£37,700 basic rate band.
After deducting the personal allowance, the non-dividend income was £24,930. Therefore, the
income tax calculation was:
•
•
•
•
£24,930 at 20%, then
£2,000 at 0% (the dividend nil rate band), then
£10,770 (37,700 – 24,930 – 2,000) at 7.5% (the remainder of the basic rate band), and
finally
£57,230 (70,000 – 2,000 - 10,770) at 32.5% (the balance of the dividend income of
£70,000)
It is not good practice to have anything other than the most basic of workings within a cell. It
is very difficult to follow the answers of those candidates who did this entire four-line income
tax calculation within one cell.
Those candidates that attempted to recalculate all of the tax and NIC figures already provided,
wasted a considerable amount of time.
Candidates that gave some thought to their layout would have found themselves in a position
to gain the 1 mark available for the conclusion with little further work.
Poppy
The income tax question was based around Poppy who was employed by Zune plc and was
also a member of a partnership.
Zune plc provided Poppy with a diesel-powered car (not meeting the real driving emissions 2
(RDE2) standard) and two mobile telephones. These benefits were all payrolled.
Poppy had been in partnership with Rose and Teasel, but Teasel resigned as a partner on 6
July 2021; the partners always sharing profits and losses equally. For the year ended 5 April
Examiner’s report – TX-UK March/June 2022
11
2022, the partnership had a tax adjusted trading loss (before taking account of capital
allowances). The partnership’s only asset was a car used by Poppy which was sold on 31 July
2021.
Poppy’s only other income was the accrued interest from gilts which were purchased on 1
January 2022 and sold on 31 March 2022.
The three requirements were all fairly straightforward, so it was surprising that this question
was not better answered.
Requirement (a) – 10 marks
Assuming that Poppy claims loss relief against her total income for the tax year 202122, calculate her taxable income for this tax year.
Although the employment aspects of this requirement were well answered by most candidates,
a number of candidates struggled to correctly allocate the trading loss. The interaction of
capital allowances and loss relief was a particular issue. The calculation of the accrued gilt
income also caused problems.
•
The car benefit should have represented 2 easy marks, but some candidates omitted
the 4% diesel surcharge, and the restriction by 8/12ths (the car only being provided for
eight months) was also sometimes incorrectly calculated or omitted altogether.
•
Most candidates recognised that only one of the mobile telephones was chargeable,
but the 20% basis of tax charge was less well known.
With regard to the trading loss, very few candidates appreciated that the balancing charge
from the disposal of the car had to be added to the trading loss before allocating the resultant
loss.
The balancing charge was simply:
•
•
•
The brought forward written down value of £8,400
Less the sale proceeds of £5,400
Restricted to the business use proportion of 30%
Many candidates overcomplicated this working by claiming allowances prior to the disposal,
with others not even realising there was a balancing event.
Having calculated a revised trading loss, the profit allocated should have been quite
straightforward. However, candidates often wasted time by not restricting their calculation to
just Poppy’s share of the £20,400 loss. The shares for Rose and Teasel were not relevant and
their calculation did not score any marks.
With Poppy receiving one-third of profits and losses for three months, and 50% thereafter, the
calculation for 2 marks was simply:
(20,400 x 3/12 x 1/3) + (20,400 x 9/12 x 1/2) = £9,350
When it comes to calculating accrued interest, candidates should remember that the relevant
figures are the nominal value and the interest rate. The gilts had a nominal value of £40,000,
an interest rate of 3%, and were owned for three months. The accrued interest calculation for
1.5 marks was therefore:
Examiner’s report – TX-UK March/June 2022
12
40,000 at 3% x 3/12 = £300
Requirement (b) – 2 marks
Explain how Poppy's income tax liability in respect of her taxable benefits for the tax
year 2021-22 will have been collected, and if any forms containing details of these
benefits will have been reported to HM Revenue and Customs (HMRC).
This requirement was answered quite poorly.
•
For the first mark, candidates simply had to say that the related income tax liability is
collected under PAYE (or through payroll).
•
For the second mark, it was necessary to state there is no reporting on form P11D.
Although some candidates picked up the first mark, very many candidates then went on to say
that reporting on form P11D (or some other form) was required.
Requirement (c) – 3 marks
Poppy filed her self-assessment tax return for the tax year 2020-21 by the filing date, but did
not make the balancing payment of £2,600 until 31 August 2022. Requirement (c) was
therefore:
Advise Poppy of the interest and penalties that will be charged by HM Revenue and
Customs (HMRC) as a consequence of her not making the balancing payment for the
tax year 2020-21 until 31 August 2022.
This requirement was generally well answered by most candidates. The key point was
appreciating that the due date for the balancing payment was 31 January 2022, so the
payment was made seven months late.
The interest charge was therefore £2,600 x 2.6% x 7/12 = £39 for 1.5 marks.
A few candidates used the official rate of interest rather than the rate for underpaid tax.
As regards penalties, there were two 5% charges; the first for being one month late and the
second for being six months late.
Candidates should realise that where a requirement is just for three marks, then no more than
two or three short calculations or sentences are required. Also, answers should be related to
the information provided, so a long, detailed, explanation of the interest and penalty rules in
general is not going to score well.
Examiner’s report – TX-UK March/June 2022
13
Mixture Ltd
The corporation tax question was generally reasonably well answered, especially parts (a)(i),
(b) and (d) which accounted for 10 of the marks. The question involved Mixture Ltd, a large
company which had to make quarterly instalment payments in respect of its corporation tax
liability.
Requirement (a)(i) – 2 marks
Explain why Mixture Ltd is classed as a large company for the year ended 31 March
2022.
For the year ended 31 March 2022, Mixture Ltd had taxable total profits of £470,000 and
dividends from a non-group company of £45,000, with the same level of profits for the previous
year. There were two other 51% group companies.
This requirement was generally very well answered, with most candidates appreciating that
profits were £515,000 (470,000 + 45,000) and the relevant threshold was £500,000
(1,500,000/3).
A few candidates based their answers on a profit threshold of £150,000 rather than
£1,500,000.
The fact that candidates were told Mixture Ltd was a large company should have helped those
who were unsure as to the treatment of the dividends. Provided the £500,000 threshold was
correctly calculated, the dividends had to be included or profits would not have been sufficient.
Although there is an exception rule, this was not relevant here because there were similar
profits for the previous year.
Examiner’s report – TX-UK March/June 2022
14
Requirement (a)(ii) – 3 marks
Calculate Mixture Ltd's corporation tax liability for the year ended 31 March 2022, and
explain when this will have been paid.
This requirement was not particularly well answered, with quite a number of candidates
treating Mixture Ltd as non-large company despite clearly being told the opposite.
Even if candidates had not revised corporation tax quarterly instalment payments, they might
have been able to gain half the available marks with good exam technique.
•
A whole mark was available for calculating Mixture Ltd’s corporation tax liability £470,000 at 19% = £89,300. Unfortunately, many candidates included the dividends
within taxable total profits.
•
Candidates should have been able to remember that instalment payments are made
quarterly, so there was a further half-mark for dividing £89,300 by four.
•
Slightly better prepared candidates could then have gained a further half-mark by
stating that the quarterly instalments are made on the 14th of each month.
The final mark covering the actual months of payment required a bit more knowledge.
Requirement (b) – 4 marks
List the expenditure incurred by Mixture Ltd during the year ended 31 March 2022 which
will have qualified as plant and machinery for capital allowance purposes.
Candidates’ answers for this section were quite mixed. Many went through each of the assets
purchased and clearly identified which expenditure qualified and which did not. Even if one or
two errors were made, they still scored most of the available marks.
However, with the answers for some candidates, it was often impossible to see what was
meant to qualify and what was not.
Mixture Ltd incurred the following expenditure:
•
A new freehold office building, with the purchase price including a staircase linking the
two floors of the building, sprinkler equipment and a fire alarm system, doors and
windows, and a ventilation system. Many candidates simply stated that there are no
plant and machinery capital allowances for an office building, and therefore effectively
ignored the included costs – losing half the available marks for this section in the
process. Another issue was splitting the sprinkler equipment and fire alarm system into
two separate assets, which led to some strange answers.
•
Machinery, with further expenditure on building alterations which were necessary for
the installation of the machinery. Most candidates correctly included the machinery,
but often incorrectly excluded the related installation costs.
•
Movable partition walls which were used by Mixture Ltd to divide up its open plan
offices. This expenditure caused a lot of confusion, with more candidates (incorrectly)
excluding it than (correctly) including it.
Examiner’s report – TX-UK March/June 2022
15
•
A new decorative wall around the boundary of Mixture Ltd’s business premises. Most
candidates correctly stated that this expenditure was excluded.
Quite a number of candidates obviously did not fully appreciate the requirements and therefore
wasted quite a bit of time in explaining the rates of capital allowance which would have been
available, or – even worse – preparing a full capital allowances computation.
As can be seen in the model solution, the easiest approach to this requirement was to simply
list each asset and then include a value for that expenditure which qualified as plant and
machinery for capital allowances, with a zero (0) used for items which did not qualify.
Requirement (c) – 2 marks
Explain why a company may wish to make a short-life asset election for capital
allowance purposes.
There were not very many good answers to this requirement, although many candidates
managed to pick up some of the available marks.
The main problem was that candidates generally explained what they knew about a short-life
asset election, rather than explaining when such an election is beneficial.
•
Few candidates seemed to appreciate that there is no benefit where the 100% annual
investment allowance can be claimed or if the super deduction of 130% is available.
•
Many candidates stated that the benefit of the election is increased capital allowances,
which is not the case. The advantage is accelerated allowances, although this does
not kick in (by way of a balancing allowance) until the asset is disposed of; and even
then the disposal must be for less than an asset’s tax written down value.
Requirement (d) – 4 marks
Calculate the property business income figure which will have been included in Mixture
Ltd's taxable total profits of £470,000 for the year ended 31 March 2022.
Mixture Ltd let out a warehouse which was surplus to requirements, with the property empty
between 1 September 2021 and 28 February 2022.
This requirement was generally well answered, and there were a number of perfect responses.
Several candidates, surprisingly, had difficulty in calculating the rent receivable, and they
should particularly remember that the cash basis is not relevant when it comes to limited
companies. Rent for the quarter ended 31 May 2022 was received on 1 March 2022, so it was
necessary to include just one-third of this figure.
The deduction for insurance often caused problems. Insurance of £1,700 had been paid for
the year ended 31 December 2021, with £1,900 paid for the year ended 31 December 2022.
The deduction was therefore:
(1,700 x 9/12) + (1,900 x 3/12) = £1,750 for 1.5 marks.
Examiner’s report – TX-UK March/June 2022
16
Many candidates included their workings for rent receivable and the insurance deduction
within a cell. As already mentioned, this is not recommended and it is very easy to forget the
brackets (or not even know they are required).
Given there were two deductions, it was also important to clearly show which numbers were
negative. Negative figures should be included by entering them as such on the spreadsheet.
It is very difficult for markers to pick up negative figures if all figures are shown positive, with
the total calculated within the cell on the lines of A1 + A2 – A3 + A4. It is also very easy to
make mistakes using this approach. If negative figures are entered, the total is simply
SUM(A1:A4).
Examiner’s report – TX-UK March/June 2022
17