Reference no: EM132762311

Question: 1- During the year ended 31 March 2021 BTM Ltd disposed of an asset that resulted in a capital loss of £35,000. SMS Ltd, the 100% subsidiary of BTM Ltd, disposed of an asset that resulted in a capital gain of £100,000.
BTM Ltd has Taxable Total Profits of £1M and SMS Ltd has Taxable Total Profits of
£800,000 including the chargeable gain and anticipates larger profits in the next accounting period. BTM Ltd holds no other shareholdings.
Requirement:
Discuss the elections available to the group companies and how they may best be used.

Question: 2- Anis owns 60% of the shares in AMX Ltd an unquoted trading company. AMX Ltd has 200,000 £1 ordinary shares in issue all of which were subscribed for at par by the existing shareholders in 2004, from which date Anis has been the managing director of the company.
Share valuations have now been agreed as follows:
20% £10 per share 40% £15 per share 60% £25 per share 80% £40 per share Requirement:
Advise Anis on ALL tax implications of gifting 40,000 of his shares to his daughter Mia (support your advice with calculations where possible).

Question: 3. Joseph Leat is 30 years old. He is employed by Totton Media plc as a computer technician, and he is also self-employed as a satellite technician. Joseph has tried to preparehisincometaxcomputationforthetaxyear 2020-21. Although he has correctly done part of his income tax computation, he could not fully complete it and there are a significant number of missing values. These missing values are marked as outstanding (O/S). The partly completed income tax computation is as follows:

Joseph Leat - Income tax computation 2020-21

		Note	£	£
	Trading profit	1		O/S
	Employment income
	Salary		35,000
	car benefit	2	O/S
	Fuel benefit	2	O/S
	Accommodation	3	O/S
				O/S
	Property business profit	4		O/S
	Bank interest			2,500
	Dividends	5		8,000
	Personal allowance			(12,500)
	Taxable income			O/S
	Income Tax 37,500 at 20% O/S at 40% O/S at 45% O/S			7,500 O/S O/S
	Income tax liability			O/S

	Tax deducted at source
	PAYE			5,789
	Income tax payable			O/S

Note 1 - Trading profit
Joseph has commenced his self-employment on 1st January 2020. His tax adjusted trading profit for the four-month period ended 30th April 2020 was £16,500, while tax adjusted trading profit for the year ended 30th April 2021 was £49,200. These figures are before taking account of capital allowances. The only item of plant and machinery owned by Joseph is his motor car, which cost £25,000 on 1 September 2020. The motor car has a CO2 emission rate of 110 grams per kilometre, and 20% of the mileage driven by Joseph is for private journeys.

Note 2 - Car and fuel benefits
Over the tax year 2020-21, Totton Media plc has provided Joseph with a diesel- powered van which has a list price of £25,000. The van cost Totton Media plc £20,000, and it has a CO2 emission rate of 94 grams per kilometre. During the tax year 2020- 21, Joseph made contributions of £2,400 to Totton Media plc for the use of the van.
During the period 1st October 2020 to 5th April 2021, Totton Media plc also has provided Joseph with fuel for private journeys. The total cost of fuel during the period 1st October 2020 to 5th April 2021 was £2,800, of which 60% was for private journeys. Joseph did not make any contributions towards the cost of the fuel.

Note 3 - Accommodation
During the tax year 2020-21, Totton Media plc has provided Joseph with living accommodation. The property has been purchased by Totton plc since 6th April 2016 at a cost of £199,000. The property market value on 6th April 2020 was £250,000, and it has an annual value of £13,000 (assuming that official rate of interest is 2.5%).
On 6th April 2020, Totton plc purchased furniture for the property at a cost of £18,000. The company pays for the running costs relating to the property, and for the tax year 2020-21 these amounted to £7,000.

Note 4 - Property business profit
Joseph owns an office which has been let out unfurnished. The office was purchased on 1st October 2020, and during October 2020, Joseph spent £10,000 replacing the building's floor. The office could not be used until this repair was carried out. During November 2020, Joseph has spent£500 onadvertisingtheoffice forrent.

On 1st January 2021, the office was let to a tenant, with Joseph receiving a premium of £60,000 for the grant of a 10-year lease. The monthly rent is £600 payable in advance, and during the period 1st January 2021 to 5th April 2021, Joseph received four rental payments.

Due to a fire, £10,600 was spent on replacing the roof of the shop during February 2021. Only £7,000 of this was paid for by his insurance company.
Joseph paidinsurance of £900 in respect of theoffice. Thiswaspaid on 1st October 2020 and is for the year ended 30th September 2021.

Note 5 - Dividends
Joseph has not considered his eligibility for dividend allowance for the tax year 2020- 21.
Other information
- Capital gains
On 4th April 2020, Joseph sold 6,000 £1 ordinary shares in HKNS plc for £41,700. He has had the following transactions in the shares of the company:

1st March 2007 Purchased 10,000 shares for £9,900. 20th July 2011 Purchased 4,000 shares for £13,900. 23rd October 2019 Offered a gift of 2,000 shares.

The gift of 2,000 shares on 23rd October 2019 was to Joseph's brother. On that date, the shares were quoted on the Stock Exchange at £2.90-£3.10. There were no recorded bargains. Holdover relief is not available in respect of this disposal.
Neither disposal of HKNS plc shares during the tax year 2019-20 qualifies for entrepreneurs' relief.

For the tax year 2019-20, Joseph is a higher rate taxpayer, and expected to remain so for the tax year 2020-21. Joseph regularly makes disposals of other investments, so no annual exempt amount is available for either of the tax years 2019-20 or 2020-21.

Required:
1- Calculate the income tax payable by Joseph Leat for the tax year 2020-21.
2- Calculate the chargeable gains arising from Joseph's disposal of HKNS plc shares during the tax year 2019-20.

3- State why it would have been beneficial if Joseph has delayed the sale of the 6,000 shares in HKNS plc until 6th April 2020.

Question: 4- Antrobus Limited had the following transactions in the quarter to 30th June 2020:
Sales: £
Standard- rated supplies (excluding VAT). 150,000
Zero- rated supplies 50,000
Exempt supplies 100,000
Input tax on expenses had been paid as follows:
Standard- related supplies
13,500
Zero- related supplies 5,000
Exempt supplies 9,000
General overheads 4,000
The general overhead input tax cannot be directly attributed to any of the listed supplies.
Requirement:
(a) Calculate the VAT payable by Antrobus Limited for the quarter.
(b) State the records and accounts which must be kept for VAT purposes and state for how long they must be retained by the trader.

Question: 5- John died on 1st of April 2021, leaving £350,000 to his wife and the remainder of his estate to his son.
At the date of his death Joe owned the following assets:
(1) His principal private main residence valued at £350,000 upon which the outstanding repayment mortgage at the date of death was £90,000
(2) A holiday home valued at £180,000
(3) Bank and Building Society Deposits amounting to £220,000
(4) ISA's with a market value of £80,000
(5) 8,000 Shares in John Ltd valued at £10 per share
(6) A life assurance policy with an open market value at April 1 2020 of £225,000 from which proceeds of £210,000 were received following Joe's death.
John had outstanding credit card bills of £8,000 at the date of his death and had also verbally promised to pay the medical expenses of £11,000 of a friend. Funeral expenses amounted to £8,000.
(7) An overseas villa valued at £150,000. Administration fees were paid overseas of £8,000.

During his lifetime he had made the following lifetime transfers:
(1) On 20 November 2014 a cash gift of £60,000 to his son on the occasion of his wedding.
(2) On 15 July 2015 and 10 March 2009, he transferred £450,000 and £200,000 respectively into a discretionary trust and paid the IHT due thereon.
(3) On 8 December 2017 he gave 4,000 shares in John Ltd to his son. Prior to the gift Joe owned 12,000 of the 20,000 shares in Joe Ltd. Share valuations agreed with HMRC at this date were as follows:

20% shareholding £8 per share 40% shareholding £10 per share 60% shareholding. £18 per share 80% shareholding. £25 per share

(4) September 2020 Payment of his granddaughter's school fees of £6,000. He has paid the fees in each of the last six years. They are funded out of John's surplus income.

The nil rate band from the tax year 2008/09 has always been £312,000

Requirement:
Compute the amount of IHT payable during John's lifetime and upon his death.

Question: 6- Zain disposed of her entire business in Sep 2020 giving rise to the following gains and losses.

	Gain	Loss
Goodwill	200,000
Factory used in the business	500,000
Investment commercial property	160,000

Warehouse used in business

He had owned the business for six years.                                          (100,000)

In addition, he disposed of his entire shareholding in Maxim Limited giving rise to a gain of £45,000. He owned 15% of the shares in Maxim Limited for 4 years and had worked for Maxim Ltd as an employee for the entire period of ownership.
Zain has capital losses brought forward at 6 April 2020 of £15,700 and his taxable income for 2020/21 was £60,000.

Requirement:
Calculate Zain's Capital Gains Tax for 2020/21 and state the due date for payment.

Question:7- Richard started to trade on 1 February 2015 and ceased trading on 31 October 2020. His accounts show the following trading income

Period ending 30 April 2016	60,000
Y/e 30 April 2017	20,000
Y/e 30 April 2018	24,000
Y/e 30 April 2019	30,000
Y/e 30 April 2020	34,000
P/e 31 October 2020	10,000

Requirement:
Calculate the trading profit assessments for all relevant tax years.

Attachment:- Income tax computation.rar