问答题
An extract from an e-mail from your manager regarding a meeting with a client, Sushi, together with an e-mail from
Sushi are set out below.
E-mail from your manager
I have just had a meeting with Sushi who has been a client of the firm since she moved to the UK from the country
of Zakuskia in May 1998. Sushi is 57 years old and was born in the country of Zakuskia. Her father died in 2005
and, as you will see from her e-mail, her mother died in October 2012. Her father and mother were both domiciled
and resident in the country of Zakuskia throughout their lives. Zakuskian inheritance tax is charged at the rate of
24% on all land and buildings situated within the country that are owned by an individual at the time of death. There
is no capital gains tax in the country of Zakuskia. There is no double tax treaty between the UK and the country of
Zakuskia.
Until the death of her mother, Sushi's only assets consisted of her house in the UK, a number of investment
properties also situated in the UK, and cash in UK bank accounts. Her total UK assets are worth approximately ￡3
million. Sushi has taxable income of ￡40,000 each year and realises taxable capital gains of more than ￡20,000
each year. She has made significant cash gifts to her son in the past and, therefore, does not require an explanation
of the taxation of potentially exempt transfers or the accumulation principle. Sushi is resident and ordinarily
resident in the UK.
I want you to write a letter to Sushi addressing the points below:
(i) UK inheritance tax and the statue
An explanation of:
- The UK inheritance tax implications of the death of Sushi's mother.
- Which of Sushi's assets will be subject to UK inheritance tax when she dies. This will require some
careful and detailed consideration of her domicile position both now and in the future.
- The manner in which UK inheritance tax would be calculated, if due, on any land and buildings
situated in the country of Zakuskia that are owned by Sushi when she dies.
- Why the gift of the statue to her son, as referred to in her e-mail, will be a potentially exempt transfer,
and how this treatment could be avoided.
The statue has not increased in value since the death of Sushi's mother. Accordingly, the proposed gift of
the statue to Sushi's son will not give rise to a capital gain.
(ii) The Zakuskian income
The Zakuskian income will be subject to tax in the UK because Sushi is UK resident. Accordingly, we need to
think about whether or not Sushi should claim the remittance basis, In order to do this I want you to prepare
calculations of the increase in her UK tax liability due to the Zakuskian income on the assumption that the
remittance basis is not available and then on the assumption that it is available. You should assume that
Sushi remits ￡30,000 (gross) to the UK each year in accordance with her plans.
In relation to the taxation of the Zakuskian income, the letter should include explanations of the meaning of
the terms 'remittance basis' and 'remittance', and whether or not the remittance basis is available to Sushi,
together with your conclusions based on your calculations but no other narrative. You should include brief
footnotes to your calculations where necessary to aid understanding of the figures.
There is no need to consider the implication of capital gains on overseas assets as Sushi does not intend to
dispose of any of her Zakuskian assets, apart from the statue, for the time being.
Thank you
Tax manager
E-mail from Sushi
My mother died on 1 October 2012 and left me the whole of her estate. I inherited the following assets.
The family home in the country of Zakuskia
Investment properties in the country of Zakuskia
Cash in Zakuskian bank accounts
Paintings and other works of art in the country of Zakuskia
The works of art include a statue that has been owned by my family for many years. I intend to bring the statue to
the UK in December 2012 and give itto my son on his birthday on 1 July 2013. The statue was valued recently at
￡390,000.
The assets inherited from my mother will generate gross annual income of up to ￡60,000 before tax, all of which is
subject to 10% Zakuskian income tax. I intend to bring half of this income into the UK each year. The balance will
remain in a bank account in Zakuskia.
I would like to meet with you to discuss these matters.
Thank you for your help.
Sushi
Required
Prepare the letter to Sushi requested in the e-mail from your manager. The following marks are available.
(i) UK inheritance tax and the statue;
(ii) The Zakuskian income
Professional marks will be awarded in this question for the appropriateness of the format of the letter, the degree to
which the calculations are approached in a logical manner, and the effectiveness with which the information is
communicated.
You should assume that the tax rates and allowances of the tax year 2011/12 will continue to apply for the
foreseeable future.
Sushi are set out below.
E-mail from your manager
I have just had a meeting with Sushi who has been a client of the firm since she moved to the UK from the country
of Zakuskia in May 1998. Sushi is 57 years old and was born in the country of Zakuskia. Her father died in 2005
and, as you will see from her e-mail, her mother died in October 2012. Her father and mother were both domiciled
and resident in the country of Zakuskia throughout their lives. Zakuskian inheritance tax is charged at the rate of
24% on all land and buildings situated within the country that are owned by an individual at the time of death. There
is no capital gains tax in the country of Zakuskia. There is no double tax treaty between the UK and the country of
Zakuskia.
Until the death of her mother, Sushi's only assets consisted of her house in the UK, a number of investment
properties also situated in the UK, and cash in UK bank accounts. Her total UK assets are worth approximately ￡3
million. Sushi has taxable income of ￡40,000 each year and realises taxable capital gains of more than ￡20,000
each year. She has made significant cash gifts to her son in the past and, therefore, does not require an explanation
of the taxation of potentially exempt transfers or the accumulation principle. Sushi is resident and ordinarily
resident in the UK.
I want you to write a letter to Sushi addressing the points below:
(i) UK inheritance tax and the statue
An explanation of:
- The UK inheritance tax implications of the death of Sushi's mother.
- Which of Sushi's assets will be subject to UK inheritance tax when she dies. This will require some
careful and detailed consideration of her domicile position both now and in the future.
- The manner in which UK inheritance tax would be calculated, if due, on any land and buildings
situated in the country of Zakuskia that are owned by Sushi when she dies.
- Why the gift of the statue to her son, as referred to in her e-mail, will be a potentially exempt transfer,
and how this treatment could be avoided.
The statue has not increased in value since the death of Sushi's mother. Accordingly, the proposed gift of
the statue to Sushi's son will not give rise to a capital gain.
(ii) The Zakuskian income
The Zakuskian income will be subject to tax in the UK because Sushi is UK resident. Accordingly, we need to
think about whether or not Sushi should claim the remittance basis, In order to do this I want you to prepare
calculations of the increase in her UK tax liability due to the Zakuskian income on the assumption that the
remittance basis is not available and then on the assumption that it is available. You should assume that
Sushi remits ￡30,000 (gross) to the UK each year in accordance with her plans.
In relation to the taxation of the Zakuskian income, the letter should include explanations of the meaning of
the terms 'remittance basis' and 'remittance', and whether or not the remittance basis is available to Sushi,
together with your conclusions based on your calculations but no other narrative. You should include brief
footnotes to your calculations where necessary to aid understanding of the figures.
There is no need to consider the implication of capital gains on overseas assets as Sushi does not intend to
dispose of any of her Zakuskian assets, apart from the statue, for the time being.
Thank you
Tax manager
E-mail from Sushi
My mother died on 1 October 2012 and left me the whole of her estate. I inherited the following assets.
The family home in the country of Zakuskia
Investment properties in the country of Zakuskia
Cash in Zakuskian bank accounts
Paintings and other works of art in the country of Zakuskia
The works of art include a statue that has been owned by my family for many years. I intend to bring the statue to
the UK in December 2012 and give itto my son on his birthday on 1 July 2013. The statue was valued recently at
￡390,000.
The assets inherited from my mother will generate gross annual income of up to ￡60,000 before tax, all of which is
subject to 10% Zakuskian income tax. I intend to bring half of this income into the UK each year. The balance will
remain in a bank account in Zakuskia.
I would like to meet with you to discuss these matters.
Thank you for your help.
Sushi
Required
Prepare the letter to Sushi requested in the e-mail from your manager. The following marks are available.
(i) UK inheritance tax and the statue;
(ii) The Zakuskian income
Professional marks will be awarded in this question for the appropriateness of the format of the letter, the degree to
which the calculations are approached in a logical manner, and the effectiveness with which the information is
communicated.
You should assume that the tax rates and allowances of the tax year 2011/12 will continue to apply for the
foreseeable future.
【正确答案】Text references. Inheritance tax overseas aspects and variations are covered in Chapter 18. Overseas aspects of
income tax are dealt with in Chapter 10.
Top tips. Remember to use a letter format in your answer - there is a specific mark for this aspect.
Easy marks. The remittance basis is a favourite topic of this examiner and there were some easy marks for basic
points.
Examiner's comments. Part (i) concerned inheritance tax and, in particular, the relevance of domicile to an
individual's tax position. The level of knowledge here was good with some very strong, thorough answers.
However, many candidates who scored well for this part of the question often did so in an inefficient manner which
may have left them short of time for the remainder of the exam. As always, there was a need to pause; this time in
order to determine the best way to say what needed to be said. Weaker candidates simply kept writing, often
repeating themselves, until they finally got to where they wanted to be. Stronger candidates wrote short, precise
phrases which earned all of the marks despite using very few words. Candidates should practise explaining areas of
taxation making sure that their explanations are concise and clear.
There was a need to address the position of both the mother and the daughter but many candidates simply
addressed 'inheritance tax' rather than the situation of the individuals. Candidates will be more successful in the
exam if they think in terms of providing advice to individuals and companies rather than addressing technical issues
as this will help them to stick to the point and to satisfy the questions' requirements.
A substantial minority of candidates produced muddled explanations confusing the importance of domicile with
residence and ordinary residence. This confusion was also evident in answers to part (ii). The three factors of
residence, ordinary residence and domicile all have various implications depending on the taxes concerned and
candidates need to know where to start such that they can then avoid writing about all of the factors at once.
A somewhat surprising error made by a significant minority of candidates was to state that the inheritance tax
position on the death of Sushi's mother depended on the domicile status of Sushi as opposed to that of her mother.
It is, of course, the status of the person whose estate has fallen in value that is relevant.
A final thought on this part of the question is that many candidates wasted time calculating inheritance tax, despite
not having sufficient information, whilst others provided a considerable amount of detail regarding the taxation
implications of making a potentially exempt transfer, despite being specifically told not to in the question.
Part (ii) concerned overseas income and the remittance basis. The performance of candidates for this part was
mixed. To begin with there was much confusion regarding the conditions that must be satisfied in order for the
remittance basis to be available with candidates mixing up domicile, residence and ordinary residence with the
seven out of nine years rule (and the 17 out of 20 years rule in respect of inheritance tax deemed domicile). The
application of the ￡2,000 rule was also misunderstood by many. There is no doubt that there is plenty to be
confused about in this area but that is why candidates need to learn it rather than acquire a hopeful understanding
of it.
Candidates were asked to explain the meaning of 'remittance' and the 'remittance basis'. Most candidates attempted
to do this, which was very encouraging, but few had much knowledge beyond the absolute basics. Similarly, most
candidates were aware of the ￡30,000 remittance basis charge but a significant number were confused as to the
situation in which the charge would be levied.
On the plus side, the vast majority of candidates provided a conclusion (as requested) and many produced neat and
reasonably accurate calculations.
Marks were available for professional skills in this question. In order to earn these marks candidates first had to
satisfy the requirement in relation to the format of the document requested. Further marks were then available for
providing clear explanations and coherent calculations.
On the whole, the performance of candidates in this area was good with the majority of candidates producing
correctly formatted documents in a style that was easy to follow. However, many candidates failed to maintain the
correct style of a document throughout their answer such that, for example, the letters written in response to this
question often referred to the client correctly as 'you' to begin with but then reverted to using the client's name later
in the answer.
income tax are dealt with in Chapter 10.
Top tips. Remember to use a letter format in your answer - there is a specific mark for this aspect.
Easy marks. The remittance basis is a favourite topic of this examiner and there were some easy marks for basic
points.
Examiner's comments. Part (i) concerned inheritance tax and, in particular, the relevance of domicile to an
individual's tax position. The level of knowledge here was good with some very strong, thorough answers.
However, many candidates who scored well for this part of the question often did so in an inefficient manner which
may have left them short of time for the remainder of the exam. As always, there was a need to pause; this time in
order to determine the best way to say what needed to be said. Weaker candidates simply kept writing, often
repeating themselves, until they finally got to where they wanted to be. Stronger candidates wrote short, precise
phrases which earned all of the marks despite using very few words. Candidates should practise explaining areas of
taxation making sure that their explanations are concise and clear.
There was a need to address the position of both the mother and the daughter but many candidates simply
addressed 'inheritance tax' rather than the situation of the individuals. Candidates will be more successful in the
exam if they think in terms of providing advice to individuals and companies rather than addressing technical issues
as this will help them to stick to the point and to satisfy the questions' requirements.
A substantial minority of candidates produced muddled explanations confusing the importance of domicile with
residence and ordinary residence. This confusion was also evident in answers to part (ii). The three factors of
residence, ordinary residence and domicile all have various implications depending on the taxes concerned and
candidates need to know where to start such that they can then avoid writing about all of the factors at once.
A somewhat surprising error made by a significant minority of candidates was to state that the inheritance tax
position on the death of Sushi's mother depended on the domicile status of Sushi as opposed to that of her mother.
It is, of course, the status of the person whose estate has fallen in value that is relevant.
A final thought on this part of the question is that many candidates wasted time calculating inheritance tax, despite
not having sufficient information, whilst others provided a considerable amount of detail regarding the taxation
implications of making a potentially exempt transfer, despite being specifically told not to in the question.
Part (ii) concerned overseas income and the remittance basis. The performance of candidates for this part was
mixed. To begin with there was much confusion regarding the conditions that must be satisfied in order for the
remittance basis to be available with candidates mixing up domicile, residence and ordinary residence with the
seven out of nine years rule (and the 17 out of 20 years rule in respect of inheritance tax deemed domicile). The
application of the ￡2,000 rule was also misunderstood by many. There is no doubt that there is plenty to be
confused about in this area but that is why candidates need to learn it rather than acquire a hopeful understanding
of it.
Candidates were asked to explain the meaning of 'remittance' and the 'remittance basis'. Most candidates attempted
to do this, which was very encouraging, but few had much knowledge beyond the absolute basics. Similarly, most
candidates were aware of the ￡30,000 remittance basis charge but a significant number were confused as to the
situation in which the charge would be levied.
On the plus side, the vast majority of candidates provided a conclusion (as requested) and many produced neat and
reasonably accurate calculations.
Marks were available for professional skills in this question. In order to earn these marks candidates first had to
satisfy the requirement in relation to the format of the document requested. Further marks were then available for
providing clear explanations and coherent calculations.
On the whole, the performance of candidates in this area was good with the majority of candidates producing
correctly formatted documents in a style that was easy to follow. However, many candidates failed to maintain the
correct style of a document throughout their answer such that, for example, the letters written in response to this
question often referred to the client correctly as 'you' to begin with but then reverted to using the client's name later
in the answer.
【答案解析】