问答题
You have recently been approached by Fred Flop. Fred informs you that he is experiencing problems in dealing with
aspects of his company tax returns. The company accountant has been unable to keep up-to-date with matters, and
Fred also believes that mistakes have been made in the past. Fred needs assistance.
The following information has been extracted from client files and from meetings with the shareholders. Assume
that today's date is 20 May 2013.
Fred Flop:
· 100% shareholder of Flop Limited.
· Managing director.
Flop Limited:
· UK trading company.
· Taxable profits of ￡595,000 in the year ended 31 March 2010.
· Has one wholly owned subsidiary.
· Both companies have a 31 March year-end.
Corporation tax return (CT600) for the year ended 31 March 2011:
· The corporation tax return for this period was not submitted until 2 November 2012, and corporation tax of
￡123,500 was paid at the same time. Taxable total profits were stated as ￡741,800.
· A formal notice (0T203) requiring the company to file a self-assessment corporation tax return (dated
1 February 2012) had been received by the company on 4 February 2012.
Examination of the accounts and tax computation for the year ended 31 March 2011:
· A ￡10,000 repairs provision was made; there is no supporting information.
· ￡46,500 legal and professional fees allowed in full without any explanation. Fred has subsequently produced
the following analysis:
Analysis of legal & professional fees
￡
Legal fees on a failed attempt to secure a trading loan 5,000
Debt collection agency fees 12,800
Obtaining planning consent for building extension 5,700
Accountant's fees for preparing accounts 14,000
Legal fees relating to a trade dispute 9,000
· No enquiry has yet been raised by HMRC.
CT600 for the year ended 31 March 2012:
· Has not been submitted yet.
· Accounts are late and nearing completion, with only one change still to be made.
· A notice requiring the company to file a self-assessment corporation tax return (0T203) dated 27 July 2012
was received on 1 August 2012. No corporation tax has yet been paid.
· Computation currently shows taxable total profits of ￡815,000 before accounting adjustments.
· A company owing Flop Ltd ￡50,000 (excluding VAT) has gone into liquidation, and it is unlikely that any of
this money will be paid. The money has been outstanding since 3 September 2011 (which was also the tax
point for the supply), and the impairment loss (bad debt) will need to be included in the accounts.
· Computer equipment totalling ￡50,000 had been expensed in the accounts. No adjustment has been made in the
tax computation. The annual investment allowance has already been used during the year ended 31 March 2012.
VAT issues:
· VAT return for the quarter ended 31 March 2013 was submitted on 15 May 2013, and VAT of ￡24,000 was
paid at the same time.
· Previous return to 31 December 2012 was also submitted late.
· No account has been made for VAT on the bad debt.
· VAT return for 30 June 2013 may also be late. Estimated VAT liability is ￡8,250.
Required
(a) (i) Calculate the revised corporation tax (CT) payable for the accounting periods ending 31 March 2011
and 2012 respectively. Your answer should include an explanation of the adjustments made as a
result of the information which has now come to light and the practical steps needed to correct the
position.
(ii) State, giving reasons, the due payment date of the corporation tax (CT) and the filing date of the
corporation tax return for each period, and identify any interest and penalties which may have arisen
to date.
Assume that the rates and allowances for Financial Year 2011 apply throughout this part and interest on
overdue tax is 3%.
(b) Explain the consequences of filing the VAT returns late and advise Fred how he should deal with the
underpayment and bad debt for VAT purposes. Your explanation should be supported by relevant
calculations.
aspects of his company tax returns. The company accountant has been unable to keep up-to-date with matters, and
Fred also believes that mistakes have been made in the past. Fred needs assistance.
The following information has been extracted from client files and from meetings with the shareholders. Assume
that today's date is 20 May 2013.
Fred Flop:
· 100% shareholder of Flop Limited.
· Managing director.
Flop Limited:
· UK trading company.
· Taxable profits of ￡595,000 in the year ended 31 March 2010.
· Has one wholly owned subsidiary.
· Both companies have a 31 March year-end.
Corporation tax return (CT600) for the year ended 31 March 2011:
· The corporation tax return for this period was not submitted until 2 November 2012, and corporation tax of
￡123,500 was paid at the same time. Taxable total profits were stated as ￡741,800.
· A formal notice (0T203) requiring the company to file a self-assessment corporation tax return (dated
1 February 2012) had been received by the company on 4 February 2012.
Examination of the accounts and tax computation for the year ended 31 March 2011:
· A ￡10,000 repairs provision was made; there is no supporting information.
· ￡46,500 legal and professional fees allowed in full without any explanation. Fred has subsequently produced
the following analysis:
Analysis of legal & professional fees
￡
Legal fees on a failed attempt to secure a trading loan 5,000
Debt collection agency fees 12,800
Obtaining planning consent for building extension 5,700
Accountant's fees for preparing accounts 14,000
Legal fees relating to a trade dispute 9,000
· No enquiry has yet been raised by HMRC.
CT600 for the year ended 31 March 2012:
· Has not been submitted yet.
· Accounts are late and nearing completion, with only one change still to be made.
· A notice requiring the company to file a self-assessment corporation tax return (0T203) dated 27 July 2012
was received on 1 August 2012. No corporation tax has yet been paid.
· Computation currently shows taxable total profits of ￡815,000 before accounting adjustments.
· A company owing Flop Ltd ￡50,000 (excluding VAT) has gone into liquidation, and it is unlikely that any of
this money will be paid. The money has been outstanding since 3 September 2011 (which was also the tax
point for the supply), and the impairment loss (bad debt) will need to be included in the accounts.
· Computer equipment totalling ￡50,000 had been expensed in the accounts. No adjustment has been made in the
tax computation. The annual investment allowance has already been used during the year ended 31 March 2012.
VAT issues:
· VAT return for the quarter ended 31 March 2013 was submitted on 15 May 2013, and VAT of ￡24,000 was
paid at the same time.
· Previous return to 31 December 2012 was also submitted late.
· No account has been made for VAT on the bad debt.
· VAT return for 30 June 2013 may also be late. Estimated VAT liability is ￡8,250.
Required
(a) (i) Calculate the revised corporation tax (CT) payable for the accounting periods ending 31 March 2011
and 2012 respectively. Your answer should include an explanation of the adjustments made as a
result of the information which has now come to light and the practical steps needed to correct the
position.
(ii) State, giving reasons, the due payment date of the corporation tax (CT) and the filing date of the
corporation tax return for each period, and identify any interest and penalties which may have arisen
to date.
Assume that the rates and allowances for Financial Year 2011 apply throughout this part and interest on
overdue tax is 3%.
(b) Explain the consequences of filing the VAT returns late and advise Fred how he should deal with the
underpayment and bad debt for VAT purposes. Your explanation should be supported by relevant
calculations.
【正确答案】Text references. CT computations in Chapters 21, 22 and 23 with payment of CT dealt with in Chapter 23. VAT
penalties are covered in Chapter 28 and bad debts in Chapter 29. Ethics are covered in Chapter 30.
Top tips. Be methodical when calculating capital allowances. Ensure you adopt clear presentation.
Easy marks. Learn your administration rules for the different taxes - they are often tested in the exam.
Examiner's comments. While candidates were broadly successful in identifying the main items to be disallowed in
part (a), candidates had little awareness of what legal and professional fees were allowable. The tendency was to
disallow both the planning consent fees and the fees on attempting to secure a loan. The latter cost is specifically
allowed by legislation.
The second element of part (a) asked candidates to state the dates for payment of tax and filling of the relevant tax
returns. Far too many candidates confused corporation tax administration with personal tax administration, with the
resulting loss of a significant number of marks. In addition, few candidates identified the fact that a company
broadly has to be large for two years in succession before it is required to make quarterly instalment payments.
In many ways part (b), relating to value added tax (VAT) issues, was less straightforward yet many candidates
scored solid marks here. The surcharge liability notice, and the implications for Flop Ltd of being in the surcharge
period was picked up by most candidates, as was the VAT treatment of bad debts.
penalties are covered in Chapter 28 and bad debts in Chapter 29. Ethics are covered in Chapter 30.
Top tips. Be methodical when calculating capital allowances. Ensure you adopt clear presentation.
Easy marks. Learn your administration rules for the different taxes - they are often tested in the exam.
Examiner's comments. While candidates were broadly successful in identifying the main items to be disallowed in
part (a), candidates had little awareness of what legal and professional fees were allowable. The tendency was to
disallow both the planning consent fees and the fees on attempting to secure a loan. The latter cost is specifically
allowed by legislation.
The second element of part (a) asked candidates to state the dates for payment of tax and filling of the relevant tax
returns. Far too many candidates confused corporation tax administration with personal tax administration, with the
resulting loss of a significant number of marks. In addition, few candidates identified the fact that a company
broadly has to be large for two years in succession before it is required to make quarterly instalment payments.
In many ways part (b), relating to value added tax (VAT) issues, was less straightforward yet many candidates
scored solid marks here. The surcharge liability notice, and the implications for Flop Ltd of being in the surcharge
period was picked up by most candidates, as was the VAT treatment of bad debts.
【答案解析】