问答题 Your manager has had a meeting with Fred Kildow, the finance director of Miller plc, and has sent you a copy of the
following memorandum.
To The files
From Tax manager
Date 1 June 2012
Subject Miller PIc
To simplify the group finance function Fred Kildow has moved all companies in the group to the same accounting
year end. Miller plc's accounting date during 2012 has therefore changed from 31 July to 31 March.
1 August2011 to 31 March 2012
The income statement for the period from 1 August 2011 to 31 March 2012 shows a profit of ￡450,000 after
accounting for the following items:
￡
Loss on disposal of machinery (Note 1) 30,000
Gift Aid donation accrued (paid 1 April 2012) 10,000
UK rental income 45,000
Advertising (Note 2) 60,000
Interest charged on overdue corporation tax 3,000
Dividend income (Note 3) 75,000
Debenture interest receivable (Note 3) 9,000
Note 1
The machinery had been used in the business and capital allowances had been claimed. It had originally cost
￡86,000 in January 2001 and was sold for ￡62,800 in October 2011. At the time of purchase, installation costs of
￡10,000 were charged in addition to the purchase price.
Note 2
The advertising included ￡37,750 for the hire of a corporate entertainment box at a sporting event. The cost was for
the hire of the box and all food and drink. During the event, Miller plc displayed its corporate logo in the window of
the box.
Note3
In September 2011, Miller plc received a dividend of ￡13,500 from Bode Ltd, ￡27,000 from Hillman Ltd and
￡34,500 from Vogtli Inc. The dividend from Vogtli Inc was received gross as it was not subject to any withholding
tax. Miller plc also received interest of ￡9,000 on a debenture loan to Bode Ltd.
Items not included in the income statement
Miller plc incurred general expenses of ￡11,550 from the management of its various investments.
Miller plc sold its entire holding in Vogtli Inc for ￡120,000 on 31 January 2012.
Capital acquisitions
Miller plc purchased a Mercedes car on 1 August 2011 for ￡28,000 which had CO₂ emissions of 180g per kin. The
Mercedes car was purchased for one of the directors with estimated private usage of 25%. On 1 September 2011
Miller plc also purchased a Jaguar car for ￡30,000 which had CO₂ emissions of lOOg per km and new office
furniture at a cost of ￡83,417. The annual investment allowance for the group is to be claimed by Miller plc.
Forecast group results - year ended 31 March 2013
Fred Kildow will be sending a copy of the group's forecast results for the year ended 31 March 2013.
He advised that Bloom Ltd is likely to break even in 2014. From 2015 onwards Bloom Ltd expects to reach trading
profit levels of at least ￡500,000 per annum.
The other group companies do not expect their income levels to change.
The capital loss shown for Weinbrecht Ltd arose on the sale of an office building in November 2012 to a non-
associated company.
Tax manager
An extract from an email from your manager is set out below.
Please prepare a report to Fred Kildow setting out the following:
1 Corporation tax liability
Provide a calculation of Miller plc's corporation tax liability for the period ended 31 March 2012.
I have calculated the indexed rise on the holding in Vogtli Inc from March 2001 to January 2012 to be ￡9,725.
2 Group issues
State, with reasons, the nature of the relationships that exist between the various companies for corporation
tax purposes in the year ending 31 March 2013.
On the basis that Fred Kildow wants to minimise the group's tax liability over the long-term, explain the
options available to utilise the losses within the group in the year ending 31 March 2013 and state the
optimum use for each loss.
You do not need to calculate the corporation tax payable.
3 VAT
Advise on the benefits of a VAT group and explain which companies, if any, should or should not be included
in a VAT group registration.
You have extracted the following further information from client files.
· The Miller plc group operates a variety of related businesses aimed at retail customers.
· The group is as follows: