NOTES TO USERS ABOUT SAMPLE PAPERS
Sample papers are published by Accounting Technicians Ireland. They are intended to provide guidance to students and their teachers regarding the style and type of question, and their suggested solutions, in our examinations. They are not intended to provide an exhaustive list of all possible questions that may be asked and both students and teachers alike are reminded to consult our published syllabus (see www.AccountingTechniciansIreland.ie
) for a comprehensive list of examinable topics.
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 only correct approach, particularly with discursive answers. Alternative answers will be marked on their own merits.
This publication is copyright 2013 and may not be reproduced without permission of Accounting
Technicians Ireland.
© Accounting Technicians Ireland, 2013.

INSTRUCTIONS TO CANDIDATES
PLEASE READ CAREFULLY
For candidates answering in accordance with the law and practice of the Northern
Ireland.
In this examination paper the £ symbol may be understood and used by candidates in Northern Ireland to indicate the UK pound sterling.
Candidates should answer the paper in accordance with the appropriate provisions up to and including the Finance Act 2013. The provisions of the Finance Act 2014 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 three questions, in the order filed, will be corrected.
Candidates should allocate their time carefully.
All workings should be shown.
All figures should be labeled as appropriate e.g. £s, units etc.
Answers should be illustrated with examples, where appropriate.
Question 1 begins on Page 2 overleaf.
The following inserts are enclosed with the paper:
• Tax Reference Material

Section A
Answer ALL THREE questions (Compulsory) in this Section
QUESTION 1 (Compulsory)
Edward was born on 29 th September 1958 and has been in practice for many years as a dentist. He is married to Simone and the couple have two small children ages three and five. The following is Edward’s Income and Expenditure account for the year ended 31 st December 2013:
Notes
Income:
Prescription income ............................
Shop income .....................................
£ £
863,518
212,118
Expenditure incurred
Purchases ...........................................
1,075,636
Staff pension costs ...............................
801,055
2,000
Wages and salaries ............................. (1) 99,670
Premises costs ..................................... (2) 7,100
Motor expenses ................................... (3) 27,520
Repairs – computer maintenance ...........
Legal and professional fees .................... (4)
General administrative expenses ............ (5)
Other expenses (course fees) ................
Depreciation – fixtures & equipment ...... (6)
500
2,720
2,482
250
719
Depreciation – motor vehicle ................
Surplus of income over expenditure ........
7,200
951,216
124,420

QUESTION 1 (Cont’d)
NOTES
(1) Wages and salaries are comprised of:
£
Shop assistants ........................ 85,420
Locum costs ............................
Simone (secretarial assistance) ..
7,650
_6,600
99,670
(2) The dental laboratory is attached to Edward’s house. Premises costs are made up of the following: £
Heat and light ....................
Insurance (buildings & contents)
Rates ..................................
3,900
1,100
900
Cleaning ............................. 1,200
7,100
67% of these costs have been agreed with HMRC as relating to Edward’s private house and the other 33% to business.
(3) Motor expenses are comprised of the following:
Fuel costs ..........................
Insurance/tax ......................
Repairs & servicing ...............
£
1,395
830
769
H P interest .........................
Payment for new car .............
1,426
23,100
27,520
The new car with CO2 emissions of 120 g/km cost £28,800 on 1 st January
2013. The remainder of this cost was financed by Edward trading in his old car. The business element of Edward’s motor expenses has been agreed with
HMRC as being 25%. Edward’s tax written down value at 31 st December
2012 on his previous car was £2,500.
(4) Legal and professional fees are comprised of the following: fees .....................
£
2,000
Stock taker’s fees ..................... 720
2,720

QUESTION 1 (Cont’d)
(4) General administrative expenses are comprised of the following:
£
Telephone
Bank charges ...........................
1,465
867
New Fax machine (purchased 28 February 2013) 150
85% 0f the telephone bills are for private use.
2,482
(5) The tax written down value of fixture and equipment at 31/12/2012 was
£1,250.
Requirement
In respect of the year ended 31 December 2013
(a) Prepare capital allowances computation for fixtures & equipment and motor vehicles assuming that where available first year allowances are claimed.
7 Marks
(b) Prepare the Adjusted Profits Computation showing clearly the make up of any adjustments required to be made to trading profits.
9 Marks
(c) State the date by which Edward is due to submit his 2013/14 tax return and pay any balance of tax due.
4 Marks
Total 20 Marks

QUESTION 2 (Compulsory)
Gary Hamilton has recently commenced business as a self-employed retailer of adults and children’s clothing.
Requirement
Write a letter to Mr Hamilton dealing briefly with each of the following questions which he has raised with you:
(a) Should he register for VAT?
(b) Will he have any problems recovering his input tax?
(c) What records should he keep?
3 Marks
2 Marks
(d) What method of VAT accounting will give him the best cash-flow and administration benefits, comparing cash accounting to the normal invoice method of accounting for VAT?
3 Marks
(2) Tina Browne owns a boutique in Coleraine, selling both adult and children’s clothing. All purchases arise from UK suppliers. Tina accounts for VAT on a cash receipts basis. She provides you with the following information in respect of the quarter ended 31st March 2014:
Gross Adults Children
£ £ £
Cash receipts from customers
Cheque payments to suppliers
Invoices received from suppliers
78,000 52,000 26,000
36,000 27,000 9,000
40,000 32,000 8,000
Cash expenses paid petty cash 2,900
Overheads paid by cheque .... 15,000
Wages and salaries paid by cheque 11,500
Deposit paid on new cash register 1,630

QUESTION 2 (Cont’d)
NOTES
(1) VAT has been paid on all petty cash expenses and on all overheads paid by cheque except for insurance costs of £1,690. The new cash register is due to be delivered in April 2014 when the purchase invoice is also expected to be received.
Requirement
(a) Calculate the VAT liability payable by Tina Browne for the quarter ended 31 input tax credits. st
March 2014. Show clearly how you can calculate both the output tax and any
(b) Complete the VAT return for the quarter ended 31 st March 2014.
8 Marks
2 Marks
Total 20 Marks

QUESTION 3 (Compulsory)
Salvo Rossini who was born on 4 July 1964, has a number of properties from which he derived a rental income:
(1) Residential house at 123 Greenacres Lane, Carryduff.
(2) Apartment at 45 The Quay, Lisburn.
This property was purchased on 1 st May 2013, for £425,000. He let the property for
£800 a month, commencing on the 1 st August 2013.
Salvo advised you that the costs associated with letting the properties for the year th April 2014 are: ended 5
Residential
House Apartment
Receipts:
Rents received
Deposit received
Notes
(i)
Payments:
Insurance (ii)
Repairs and renewals
Rates
Bank repayments
Collection expenses
(iii)
(iv)
(v)
Advertising (vi)
£
15,000
600
4,080
1,700
6,180
1,500
£
6,400
800
425
930
8,580
640
125
Management fees (vii)
Furniture (viii)
Ground Rents
320
5,875
36
(i) This is a security deposit which is refundable at the end of the lease.
(ii) These are the costs for the 12 months ended 5 th
(iii) The costs comprised:
New slates to roof ..........
April 2014.
£
970
Gardening
Installation of oil fired central heating .. 2,720
4,080

QUESTION 3 (Cont’d.)
(iv) These are the bank repayments on the bank loans to acquire the properties.
The amounts represent payments made for the 12 months ended 5 th April
2014. The interest element included in these payments was:
£
House
Apartment £8,580
(v) Salvo Rossini engages a firm of estate agents to collect the rents on his behalf.
(vi) Advertising for a tenant.
(vii) Fee paid to the apartment management company to care for the apartment block for the year.
(viii) Salvo spent £5,875 on kitchen and bedroom furniture and equipment prior to first letting.
Salvo Rossini had the following other income for the tax year ended 5 April 2013:
Income:
Employment income
Net dividends from UK Trading
(1)
(2)
£
32,120
13,500 company
Bank deposit interest- standard deposit account
Net (3)
April 2014 show:
£
1,600
(1) The employment income from Salvo’s employment with Ferris Foods Limited.
The P60 details for the tax year ended 5 th
Gross salary .................................... £32,120
£4,536
(2) Dividends from Ulster Bank Plc £13,500.
(3) Deposit interest income arose on an ordinary bank account with the Eastern
Link Building Society. The net amount received £1,600.
Requirement
In respect of the tax year ended 5 th April 2014: -
(a) Compute the net rental income of Salvo Rossini.
(b) Calculate any balance of Income Tax payable or repayable by/to Salvo
Rossini.
Total 20 Marks

Section B
Answer ANY TWO of the FOUR questions in Section B
QUESTION 4 (Optional)
(1) BLUE MOON Ltd., a UK registered trading company, which had previously made up accounts to 30th June, changed its year-end to 31 st March. BLUE
MOON Ltd., is a close company with no other associated companies for taxation purposes. Its results for the three accounting periods ended 31
March 2014 were as follows. st
12 Months Ended
30 th June 2012
£
9 Months Ended
31 st March 2013
£
12 Months Ended
31 st March 2014
£
Trading Profit/(loss)
Interest Income
Chargeable Gains
101,700
2,500
-
89,070
4,500
13,000
(221,880)
-
10,000
For the accounting period ended 31st March 2015 the company is predicting a trading profit of £30,000, Interest income of £5,000 and chargeable gains of £35,000.
Requirement
Compute the taxable profits for each accounting period for BLUE MOON Ltd., on the assumption that the company makes all available loss relief claims so as to obtain relief against the earliest possible profits. (Candidates are required to show clearly how losses are utilised by maintenance of a ‘loss memorandum’ account.). Quantify the predicted amount of any unutilised trading loss at 31 st March 2014 and state how this can be utilised in the future, and assuming BLUE MOON Ltd., predictions are correct for the accounting period ending 31 st March 2015, the loss (if any) that will be available to carry forward against future profits.
Total 20 Marks

QUESTION 5
(a) On 5 th July 2013, Pat Jervis sold a house for £850,000. This house had been rented to tenants ever since its acquisition on 5 th July 2003. The house had been acquired along with 109 acres of land at a total cost of £565,000. Pat had incurred allowable costs of £8,000 on the sale of the house. The 109 acres of land which Pat retained was valued at £1,000,000 on 5
2013/2014. th July 2013.
Pat is a higher rate taxpayer and has not made any other capital disposals in
Requirement
For the tax year 2013/2014 how much Capital Gains tax is payable by Pat Jervis?
(b) On 29 th September 2013, Hugh Baillie sold an antique vase for £7,900. The vase had been purchased in January 2008 for £2,000. He has taxable income after all allowable deductions and personal allowance of £20,000.
5 Marks
Requirement
What is Hugh Baillie chargeable gain (ignoring annual exemption) on the sale of this antique vase?
5 Marks
(c) Taylor Smyth has been in business for ten years. She purchased her factory building for £360,000 in April 2001 at which time she commenced trading in the manufacture of air conditioning equipment for offices. In October 2013 she ceased trading and sold the factory on 31 st October 2013 for £1,000,000.
Taylor incurred solicitor’s costs in relation to the sale of £2,650, estate agent fees of £2,950 and tax panning fees of £3,000. Taylor also had capital losses of £151,000 brought forward at 6 April 2013 from a shareholding in a private limited company that failed. These losses have been agreed with HM
Revenue & Customs. Taylor has not made any other capital disposals in
2013/14.
Requirement
What is Taylor Smyth’s capital gains tax liability in respect of the sale of the factory?
5 Marks
(/ over)

28 th February 2014 Shane Young made a gift of a painting worth £190,000 to his daughter Sinead. Shane had acquired this painting at an auction for
£5,000 on 2 nd July 1978. The value of the painting at 31 st March 1982 was
£18,000. On 28 th February 2003 Shane spent £6,000 on restoration costs in respect of this painting. Shane Young is a higher rate tax payer and has not made any other capital disposals in 2013/14.
Requirement
What is Shane Young’s liability to capital gains tax in respect of the gift of this painting?
5 Marks
Total 20 Marks

QUESTION 6 (MULTIPLE CHOICE)
The following multiple choice question consists of TEN parts, each of which is followed by FOUR possible answers. There is ONLY ONE right answer in each part.
Requirement
Indicate the right answer to each of the following TEN parts.
N. B. Each part carries 2 marks. Candidates should answer this question by ticking the appropriate boxes on the special green answer sheet which is supplied with the examination paper.
[1] Zack’s employer provides him with a company car bought new on 6 th June
2013. The car’s CO
2
figure is 210 grams per kilometre. The car’s list price is
£18,450 and it is fuelled by diesel. The benefit-in-kind for 2013/14 on this car is:
(a) £5,227.50
(b) £5,381.25
(c) £6,273.00
(d) £6,457.50
[2] On 31 st January 2014 Yvonne had an outstanding balancing payment on her
2012/13 income tax liability of £4,320. Yvonne’s 2013 tax return was submitted on 31 st January 2014; however, this tax was paid late on 13
March 2014. The amount of surcharge on late payment of this tax was:- th
(a) £100
(b) £216
(c) £316
(d) £532
[3] Vincent is a single person born 10/11/1940 and in the tax year ended 5 th
April 2014, he received income from retirement pensions of £6,545. Vincent also received bank deposit interest of £1,500 (net of tax deduction at source) and dividends (net) of £351. No tax has been paid on the pension income.
Vincent’s income tax repayable for 2013/14 is :-
(a) £273.00
(b) £304.50
(c) £375.00
(d) £414.00
2

QUESTION 6 (Cont’d)
[4] Ursula born 23/06/53 receives the following in 2013/14-
Child benefit
Dividends (Net) from a UK close company
Interest on National Savings Income Bonds
Maintenance payments from former spouse
Interest on overpaid Income Tax from 2012/13
£1,575
£9,000
£5,200
£4,600
£ 139
Ursula’s gross taxable income for the tax year 2013/14 is:
(a) £10,000
(b) £11,575
(c) £15,200
£21,514 (d)
[5] Timothy operates a small business based in Ballymena, Co. Antrim. Timothy can apply to join the Flat Rate Scheme for small businesses provided there are reasonable grounds for believing that his total business income for the next year will be: -
(a) £100,000 or less exclusive of VAT
(b) £100,000 or less inclusive of VAT
(c) £150,000 or less exclusive of VAT
(d) £150,000 or less inclusive of VAT
[6] Which of the following is not a zero rated supply for VAT purposes: -
(a) supply of children’s footwear
(b) supply of cold unprocessed food by a supermarket
(c) export of goods to a foreign country outside the EC.
(d) provision of insurance
[7] Which of the following expenses provided by employer to an employee earning £8,500 pa is an assessable BIK under the taxation of earnings from employment: -
(a) business travel expenses reimbursed
(b) contribution to the employees personal pension plan
(c) relocation expenses of £6,000 paid on moving office to another part of the country
(d) private medical insurance

QUESTION 6 (Cont’d)
[8] Simon aged 35, purchased a 100 acre estate in May 2003 for £1 million and incurred legal and other allowable costs of £50,000. In 1 st October 2013, he sold 10 acres of the estate for £700,000. The costs of this sale were £30,000.
The value of the remaining land was £3 million. Simon’s capital gain (before any annual exemption due), on this sale of this non-business asset is: -
(a) £282,811
(b) £471,351
(c) £480,811
(d) £501,351
[9] RUPEE Ltd. makes a trading loss in the year to 31 st
Ltd. can claim loss relief against the total profits make in the year ended 31
December 2013 on the following basis:
December 2013. RUPEE st
(a) the claim can be limited in amount so as to leave sufficient profits in charge to cover non trade charges
(b) the claim can be limited so as to leave sufficient profits to cover trade charge
(c) the claim can be limited so as to leave sufficient profits in charge to cover all charges
(d) the claim cannot be limited so as to leave profits in charge to cover any charges incurred by the company.
[10] PUGWASH Ltd. in the year ended 31 st March 2014 had profits chargeable to corporation tax totaling £2 million. The company pays its corporation tax liability under the quarterly installment payment provisions. The first installment of corporation tax will be due on:-
(a) 14 th
(b) 14 th
(c) 14 th
(d) 14 th
October 2013
January 2014
October 2014
January 2015

QUESTION 7
Sammy Silkstone is a client of your firm, and as such you prepare both personal tax returns (Form SA ) for her and also prepare the Corporation tax return for the company she owns – Silky Fabrics Ltd. One of Sammy’s friends has recently been the subject of an enquiry into their tax affairs by HM Revenue & Customs and she is now expressing concern that either her or Silky Fabrics Ltd’s recent returns could also be subject to an enquiry.
Sammy Silkstone has asked you to explain the rules in respect of such enquiries to her.
Requirement
Write a letter to Sammy Silkstone, in which you set out the tax position in respect of an enquiry carried out by HM Revenue & Customs. This letter should cover the following areas:
(a) The scope of enquiries.
(b) The time limit for enquiries.
(c) HM Revenue & Customs entitlement and power to call for documents
(d) The amendment of returns during enquiries
(e) The completion of enquiries
(f) The right of appeal
(g) Payment of tax, interest and penalties
Total 20 Marks

Advanced Taxation (Northern Ireland)
Sample Paper 1 – Suggested Solutions

Solution 1
EDWARD a) Capital allowances computation
WDV B/fwd
Balancing charge
Additions not qualifying for FYA
Car CO2 emissions <160g/km
Additions qualifying for AIA (28/02/13)
AIA
WDA @ 18%
Note restricted private use on motor vehicle
Capital allowances claimed
£
Fixtures Motor Pte Capital
£ £
75%
£ £
1,250 2,500
-
1,250
-
(3,200 )
-
Balancing
-
28,800
150
-
150 charge
150
1,250 28,800
3,885
1,671

b) Adjusted Profits computation
£ £
124,420 Surplus income per accounts
Add
Premises costs
Motor expenses
Motor expenses (27,520-23,100 x75%)
General administration fees – New fax machine
General administration fees - telephone
Depreciation - fixtures & equipment
Depreciation - motor vehicle
Balancing charge
67%
85%
4,757
23,100
3,315
150
1,245
719
7,200
Deduct
800
40,486
164,906
Capital allowances
Balancing charge
Adjusted profit c) Date for online submission of return to HM Revenue& Customs is 31st January (following end of tax year on 5th April) unless Edward is expecting
the Revenue to compute his tax liability in which case the return needs to be submitted to them by 31 st
October following the end of the tax year
Any outstanding/balancing payment must also be made by 31st January following the end of the tax year with two payments on account each being 50% of the previous year’s total tax liability having been due in two payments on 31 January during the tax year and 31 July following the end of the tax year respectively
1,840
800
164,035

Solution 2
Gary Hamilton
19th September 2013
Mr G Hamilton
31 Oval Place
BELFAST BT4 9AB
Dear Mr Hamilton
In response to the questions raised at our meeting in connection with VAT , I have dealt with these below: -
(a) Should you register for VAT?
You supply both adults and children’s clothing. If your turnover from the retail of these exceeds £79,000 in the next 12 month period (or any consecutive
12 month period) then registration for VAT will be compulsory. You will then have to account for VAT on all your sales. VAT on the sale of adults clothing will be at the standard rate of 20% whereas VAT on children’s clothing , whilst still counting as a vatable supply is zero rated.
(b) Will you be able to recover your input tax?
Input tax is the VAT you are charged by other VAT registered traders on the supply of goods or services to you. Once registered you will be able to recover
VAT on all goods or services incurred wholly or exclusively for the purposes of the business except where this is not permitted under the VAT legislation.
Examples of non-recoverable input tax are the VAT incurred on entertaining, goods taken for your own use, or on the purchase of a motor car.
This will normally be recovered in the first instance by deduction against the output tax you will be due to pay over to HM Revenue and Customs on your sa
In the event of you incurring substantial start up costs eg. building repairs or improvements which are subject to VAT, you might decide that it is to your advantage to register for VAT at an earlier date in order to recover this input tax.
(c ) What records should you keep?
You should retain copies of all VAT invoices sent to you in connection with goods or services purchased for the business along with a record of all purchas incurred showing the date of purchase, the suppliers name and VAT number and the amounts involved both net of VAT and the VAT incurred. As a retaile should also keep sales invoices and or daily till rolls showing the date of sale, the type of goods sold and the gross amount of goods sold (inclusive of VAT)
Other business records including your cash and bank records of the business, bank statements and hire purchase and leasing records also need to be retained.
The normal basis for accounting for VAT is likely to be the most suitable for your business. This will mean that VAT will be payable in the period that you generate your sales invoice and input VAT recoverable in the period in which you receive the suppliers invoice.
As a retailer the cash accounting method for VAT would not normally be suitable because under this method you will be paying over output VAT immediate as most of your sales are cash rather than credit sales but you will not be able to recover input VAT on purchases until after the VAT period ending (usually quarter ending) whenever you pay the suppliers invoice.

Solution 2 (CONTINUED)
(2) Tina Browne
(a) VAT for the quarter ended 31st March 2014
Adults clothing
Childrens clothing
Purchases per cheque payments
Adults clothing
Cash register (deposit paid but no VAT invoice)
Vatable overheads (15,000-1,690)
Cash expenses – Vatable
Gross Vat(1/6) Net
£ £ £
52,000 8,667
26,000 -
43,333
26,000
78,000 8,667
22,500 27,000 4,500
9,000 9,000
-
13,310
-
2,218
-
11,092
52,210 7,201

Solution 2 (CONTINUED)
(b) VAT 100 return
Box
Box
Box
Box
Box
Box
Box
Box
Box
2
3
4
5
6
7
8
9
0
8,667
7,201
1,466
69,333
45,009
0
0
Output Vat
Input VAT
VAT payable
Net outputs
Net inputs

(1)
Solution 3
Salvo Rossini
Net Rental Income
Income received
Deduct
Insurance
Repairs & renewals
Rates
Bank interest Repayments
Collection expenses
Advertising
Management company fees
Ground Rents
10% Wear & tear (10% x Income – Rates)
Net (loss)/surplus for period
Total
£
21,400
-
1,025
1,360
2,630
11,580
2,140
125
320
36
1,877
307
House Apartment
£ £
15,000
-
600
1,360
1,700
3,000
1,500
1,330
6,400
-
425
-
930
8,580
640
125
320
36
547
5,510 (5,203 )

Solution 3 (Cont’d)
(2) Computation of the balance of income tax payable
Income
Dividends
Deduct
Tax payable thereon starting rate band 0 @10% at basic rate 22,987 @ 20% at savings rate 2,000 @ 20% at dividend rate 7,024 @10% dividends at higher rate 7,976 @ 32.5%
Tax credited on Dividends
Bank Interest
PAYE
Tax Payable dividend
income
£
32,120
307
2,000
15,000
49,427
£
32,120
307
-
(9,440)
39,987
savings inc income
£ £
32,427
-
2,000 15,000
(9,440)
22,987
2,000
2,000
15,000
15,000
-
4,597.40
400 .00
702.40
5,699.80
2,592.20
8,292.00
(1,500.00)
(400.00)
(4,536.00)
1856.00

Solution 4
Blue Moon Ltd
Computation of profits chargeable to corporation tax
Trading ProfitsSch D Case 1 less S393 (1) LOSS RELIEF
Interest Income
Chargeable gains less S393 A (1) c/back against 9 months ended 31/03/11 c/back against last 3 months of the previous ap
PCTCT y/e p/e y/e
30/06/2012 31/03/2013 31/03/2014
£
101,700
£
89,070
£
-
(Predicted) y/e
31/03/2015
£
30,000
-
(30,000)
101,700
2,500
-
104,200
89,070
4,500
13,000
106,570
-
10,000
10,000
-
(10,000 )
-
5,000
35,000
40,000
-
(106,570 )
-
(26,050)
78,150 NIL NIL 40,000

Solution 4
Loss memorandum
Loss y/e 31st March 2014 utilised against this years income utilised against 9 m/e 31/03/13 utilised against 3 m/e 30/06/12 ( 104,200* 3/12) c/b 3 years abolished for AP after 23 Nov 2010 predicted usage against y/e 31/03/15
Loss carry forward against future trade profits only
221,880
( 10,000)
211,880
-
(106,570 )
105,310
( 26,050
79,260
(30,000)
49,260

Solution 5 a) Pat Jervis
Sale of house
Deduct allowable costs on sale cost of asset sold - part disposal ( A/(A+B) )
(565000*850k/1,850k)
Gain annual exemption
Gain
Capital Gains Tax payable b) Hugh Baillie
Sale of antique vase deduct cost
Gain but as this is a chattel this gain is restricted to:
£7,900 - £6,000 x 5/3
28%
£
850,000
-
(8,000 )
842,000
-
(259,595)
582,405
-
(10,900)
571,505
160,021
7,900
-
2,000
5,900
3,167

Solution 5 (Cont’d) c) Taylor Smyth
Sale of factory building deduct allowable selling costs solicitors fees estate agents fees
Deduct acquisition costs
Capital gain less capital losses
Annual exemption
Gain subject to CGT
Gain will be charged at the Entrepreneurs’ Relief Rate of 10%
Note tax planning fees cannot be deducted. d) Shane Young
Gift of painting
Value 31/03/82 restoration costs
Gain
Annual exemption
Gain subject to CGT
Capital Gains Tax payable
Capital Gain HR @ 28%
(2,650 )
1,000,000
(2,950 )
( 5,600)
994,400
(360,000 )
634,400
(151,000)
483,400
( 10,900)
472,500
190,000
(18,000 )
172,000
( 6,000)
166,000
(10,900 )
155,100
43,428

Solution 6
Multiple Choice
8
9
10
5
6
7
1
2
3
4
B
B
D
A
C
D
D
C
B
C
Workings
18,450 X 35% (max) X10/12
5% £4,320
Total income = £8,810 (gross) covered by allowances due only get refund of tax deducted by bank on savings income
£15,200 (Income from dividends & national savings income bonds)
£150,000 or less exclusive of VAT
Provision of insurance is exempt
Private medical insurance provision is a B-I-K
700K-30K=£670K - (1,050K X700K/3700K)
The loss relief claim cannot be limited to cover charges
First installment due on 14th day 6 months prior to y.e under Corp Tax installment

Solution 7
Sammy Silkstone
Company Director
Silky Fabrics Ltd
123 Linen Road
BELFAST
19 September 2013
Dear Ms Silkstone
HM Revenue & Customs Enquiries
Further to our recent discussions, I have set out below the key aspects in respect of HM Revenue &
Customs enquiries into the affairs of a taxpayer.
Scope of an enquiry
The enquiry could cover any aspect of either you personal return or the company's tax return. This might cover anything included in the return or that should have been included therein. This also includes any claims or elections that have been made.
Time Limit
Written notice of an enquiry into a tax return can be issued by HM Revenue & Customs during the twelve months after filing date where the return was submitted on or before the due date.
If the return was submitted late then this period is extended to the quarter end day following the first anniversary of the submission date. (31 January, 30 April, 31 July or 31 October)
In addition if an amendment is made to the return by either the taxpayer(yourself) or the company, then this window is extended to the quarter day following the first anniversary of the date the amendment was made.
If any enquiry is not made during this period the it becomes final, unless HM Revenue & Customs discover fraudulent or negligent conduct in making the return (in which case a discovery assessment can be made)
Power to call for documents
Where an enquiry is underway, HM Inspector of Taxes may request from the taxpayer/company any documents that it believes are necessary to enable it to discover whether a return is incorrect or incomplete.
A time limit will be given to comply with this request, although this will not be less than 30 days.
Copies of documents may be supplied rather than originals (although the originals can be requested for inspection and HM Revenue & Customs can take copies of or make extracts from documents.
Amendment of a return during an enquiry
If a return is subject to an enquiry an amendment to the return can still be made by the taxpayer/company provided that it is within the normal timelimit of twelve months after the filing date. Although this does not restrict the scope of the enquiry it may be taken into account when HM Revenue & Customs are arriving at their conclusions.
Completion of enquiries
An enquiry is completed when HM Inspector of Taxes issues a closure notice. This informs the taxpayer that the enquiry is complete and of the conclusions reached. It must therefore state either that no amendment to the return is required or provide details of any amendments made. The notice takes effect when issued.
The taxpayer may apply to the General Commissioners for a direction requiring that a closure notice be issued within a specified period.
Right of appeal
Appeals can be made within 30 days of the issue of a closure notice to the Commissioners against decisions

Solution 7 (Cont’d) contained therein. Such an appeal must be in writing and must specify the grounds for the appeal.
Payment of tax
Any additional tax found due should be paid as soon as possible. HM Revenue & Customs may amend the has the right to appeal against this assessment and postpone payment of the tax,
If additional tax results from the enquiry interest will run from the normal due date,
If HM Revenue & Customs discover that the return was submitted negligently or fraudulently then a penalty up to a maximum of the resulting tax underpaid may be levied. HM Revenue & Customs have the power to reduce penalties and interest, although this is rarely done in the case of interest.
I trust this deals with any concerns you may have, but please do not hesitate to contact me with any questions
Yours sincerely
Ann Accountant