问答题
An extract from an e-mail from your manager is set out below.
I attach a letter from Frank Coltrane who is about to sell the unincorporated business (known as 'Alto') that he has
owned and operated since 2005. I would like you to prepare notes on the tax issues raised by Frank for me to use at
a meeting we are going to have later this week. I set out below some thoughts I have had which you should refer to
when preparing your notes.
(i) Capital gains tax
I have calculated that Frank's capital gains on the sale of the unincorporated business will be ￡420,000 and
I'd like you to assume that the Tenor plc shares will be sold for ￡1,400,000 on 31 July 2015. Because the
sale of Alto will be Frank's only chance to get entrepreneurs' relief we have agreed that he will disclaim
incorporation relief so please prepare your calculations on this basis. By the way, Frank has capital losses
brought forward as at 6 April 2012 of ￡154,500.
Frank may be willing to gift some shares in Tenor plc to his wife prior to both of them selling their shares on
31 July 2015. Please include a summary of all of the tax implications of such a gift and the maximum
potential tax saving. Both Frank and his wife are resident, ordinarily resident and domiciled in the UK. You
can assume that Frank and his wife will be higher rate taxpayers in 2015/16.
(ii) Corporation tax
Keep your comments brief and specific to Soprano Ltd. Soprano Ltd has trading losses brought forward as
at 1 August 2011 of ￡65,000. I have reviewed the consolidated financial statements of Tenor plc and can
confirm that the group is large for all aspects of corporation tax.
(iii) Value added tax (VAT)
Don't forget that the supply of baby clothes is zero rated.
Please keep your notes brief and clear so that I can find my way around them during the meeting.
Alice
The letter from Frank Coltrane is set out below.
1 Garden Walk
Manchester
Ms A Peters
F & G Co
Manchester
28 May 2012
Dear Alice
You'll be pleased to know that I've finally agreed a deal with the management of Tenor plc and that the company is
going to buy my 'Alto' business on 31 July 2012 for ￡1,350,000 despite my recent poor results. I'm delighted with
the price even though they will only pay me ￡200,000 in cash with the balance in shares in Tenor plc. My
shareholding in Tenor plc will be less than 1% and we have agreed that I will not sell the shares until I leave the
company's employment (although I am allowed to give shares to my wife if I wish).
As you know, Tenor plc is a very large quoted company (it has 34 wholly owned UK resident trading subsidiaries).
I'm going to be put in charge of Soprano Ltd, one of the smallest subsidiaries, that makes and sells baby clothes.
Soprano Ltd is expected to have taxable trading profits (it has no other income or chargeable gains) of at least
￡80,000 and possibly as much as ￡110,000 on turnover (revenue) of ￡500,000 for the year ending 31 July 2012.
We have agreed a fixed term employment contract from 1 August 2012 until 31 July 2015 with an annual salary of
￡52,000.
Now that the deal is done I need the following from you:
(i) A calculation of the amount of capital gains tax I will have to pay in respect of both the sale of my Alto
business and the shares in Tenor plc and when the tax will be payable in each case.
(ii) I have no experience of corporation tax. Please let me have a brief explanation of the taxable periods of
Soprano Ltd, its tax rates and the dates on which the tax will be payable.
Soprano Ltd buys services from two other subsidiaries of Tenor plc. There has been a proposal that the
prices charged to Soprano Ltd in the future should be increased in order to reduce its effective rate of
corporation tax.
Is this a sensible suggestion?
(iii) Please let me have your interpretation of the value added tax (VAT) position of Soprano Ltd as I keep getting
confused in my discussions with the management of Tenor plc. As you know, I pay VAT annually on the
cash basis in respect of my Alto business. Why does Soprano Ltd prepare its VAT returns monthly on the
accruals basis? Also, why do the other Tenor plc companies charge VAT on the services supplied to
Soprano Ltd when all the companies are wholly owned by Tenor plc? Finally, what is the VAT position when
Soprano Ltd purchases raw materials from countries in South America?
Thanks in advance for your help.
Frank
Required
Prepare the meeting notes requested in the e-mail from your manager. The following marks are available.
(i) Aspects of capital gains tax together with all of the tax implications of the potential gift to Frank's wife;
(ii) Aspects of corporation tax;
(iii) Aspects of value added tax.
Professional marks will be awarded for the appropriateness of the format and presentation of the notes and the
effectiveness with which the information is communicated.
Assume that the tax rules and rates for 2011/12 and Financial Year 2011 continue to apply in subsequent years.
I attach a letter from Frank Coltrane who is about to sell the unincorporated business (known as 'Alto') that he has
owned and operated since 2005. I would like you to prepare notes on the tax issues raised by Frank for me to use at
a meeting we are going to have later this week. I set out below some thoughts I have had which you should refer to
when preparing your notes.
(i) Capital gains tax
I have calculated that Frank's capital gains on the sale of the unincorporated business will be ￡420,000 and
I'd like you to assume that the Tenor plc shares will be sold for ￡1,400,000 on 31 July 2015. Because the
sale of Alto will be Frank's only chance to get entrepreneurs' relief we have agreed that he will disclaim
incorporation relief so please prepare your calculations on this basis. By the way, Frank has capital losses
brought forward as at 6 April 2012 of ￡154,500.
Frank may be willing to gift some shares in Tenor plc to his wife prior to both of them selling their shares on
31 July 2015. Please include a summary of all of the tax implications of such a gift and the maximum
potential tax saving. Both Frank and his wife are resident, ordinarily resident and domiciled in the UK. You
can assume that Frank and his wife will be higher rate taxpayers in 2015/16.
(ii) Corporation tax
Keep your comments brief and specific to Soprano Ltd. Soprano Ltd has trading losses brought forward as
at 1 August 2011 of ￡65,000. I have reviewed the consolidated financial statements of Tenor plc and can
confirm that the group is large for all aspects of corporation tax.
(iii) Value added tax (VAT)
Don't forget that the supply of baby clothes is zero rated.
Please keep your notes brief and clear so that I can find my way around them during the meeting.
Alice
The letter from Frank Coltrane is set out below.
1 Garden Walk
Manchester
Ms A Peters
F & G Co
Manchester
28 May 2012
Dear Alice
You'll be pleased to know that I've finally agreed a deal with the management of Tenor plc and that the company is
going to buy my 'Alto' business on 31 July 2012 for ￡1,350,000 despite my recent poor results. I'm delighted with
the price even though they will only pay me ￡200,000 in cash with the balance in shares in Tenor plc. My
shareholding in Tenor plc will be less than 1% and we have agreed that I will not sell the shares until I leave the
company's employment (although I am allowed to give shares to my wife if I wish).
As you know, Tenor plc is a very large quoted company (it has 34 wholly owned UK resident trading subsidiaries).
I'm going to be put in charge of Soprano Ltd, one of the smallest subsidiaries, that makes and sells baby clothes.
Soprano Ltd is expected to have taxable trading profits (it has no other income or chargeable gains) of at least
￡80,000 and possibly as much as ￡110,000 on turnover (revenue) of ￡500,000 for the year ending 31 July 2012.
We have agreed a fixed term employment contract from 1 August 2012 until 31 July 2015 with an annual salary of
￡52,000.
Now that the deal is done I need the following from you:
(i) A calculation of the amount of capital gains tax I will have to pay in respect of both the sale of my Alto
business and the shares in Tenor plc and when the tax will be payable in each case.
(ii) I have no experience of corporation tax. Please let me have a brief explanation of the taxable periods of
Soprano Ltd, its tax rates and the dates on which the tax will be payable.
Soprano Ltd buys services from two other subsidiaries of Tenor plc. There has been a proposal that the
prices charged to Soprano Ltd in the future should be increased in order to reduce its effective rate of
corporation tax.
Is this a sensible suggestion?
(iii) Please let me have your interpretation of the value added tax (VAT) position of Soprano Ltd as I keep getting
confused in my discussions with the management of Tenor plc. As you know, I pay VAT annually on the
cash basis in respect of my Alto business. Why does Soprano Ltd prepare its VAT returns monthly on the
accruals basis? Also, why do the other Tenor plc companies charge VAT on the services supplied to
Soprano Ltd when all the companies are wholly owned by Tenor plc? Finally, what is the VAT position when
Soprano Ltd purchases raw materials from countries in South America?
Thanks in advance for your help.
Frank
Required
Prepare the meeting notes requested in the e-mail from your manager. The following marks are available.
(i) Aspects of capital gains tax together with all of the tax implications of the potential gift to Frank's wife;
(ii) Aspects of corporation tax;
(iii) Aspects of value added tax.
Professional marks will be awarded for the appropriateness of the format and presentation of the notes and the
effectiveness with which the information is communicated.
Assume that the tax rules and rates for 2011/12 and Financial Year 2011 continue to apply in subsequent years.
【正确答案】Text references. Capital gains tax basics are covered in Chapter 11 and reliefs in Chapter 13. Stamp duty is covered
in Chapter 19. Corporation tax computation is in Chapter 22 and transfer pricing in Chapter 27. VAT is dealt with in
Chapters 28 and 29.
Top tips. Make sure you use all the information given in the question and use it to answer the specific questions
set. Do not be tempted to write generally about what you know about a particular tax.
Easy marks. The basic corporation tax in part (ii) should have yielded easy marks.
Examiner's comments. Candidates' performance on part (i) of the question was good. Most problems that arose were
self-inflicted in that the question stated that incorporation relief would not be claimed but many candidates insisted on
carrying out various calculations in relation to that relief. Also, a minority of candidates treated the sale of the
unincorporated business as a sale of shares. Most candidates handled the inter-spouse transfer correctly. Part (ii) was a
test of the ability of candidates to identify their relevant knowledge of the basics of corporation tax and to summarise it in
an appropriate manner. This should have been a straightforward requirement and for many candidates it was. However,
some candidates failed to stick to the point and so addressed unnecessary areas (for example group losses) whilst failing
to cover all of the required issues. There was also a failure to use the information in the question (for example, the
predicted profit levels) in order to ensure that the comments made were specific to this particular company. The transfer
pricing aspect of this part was handled well. Part (iii) required the consideration of a number of aspects of VAT and was
done well. As always, weaker candidates could not resist writing down everything they knew rather than simply answering
the question, particularly in connection with group registration.
in Chapter 19. Corporation tax computation is in Chapter 22 and transfer pricing in Chapter 27. VAT is dealt with in
Chapters 28 and 29.
Top tips. Make sure you use all the information given in the question and use it to answer the specific questions
set. Do not be tempted to write generally about what you know about a particular tax.
Easy marks. The basic corporation tax in part (ii) should have yielded easy marks.
Examiner's comments. Candidates' performance on part (i) of the question was good. Most problems that arose were
self-inflicted in that the question stated that incorporation relief would not be claimed but many candidates insisted on
carrying out various calculations in relation to that relief. Also, a minority of candidates treated the sale of the
unincorporated business as a sale of shares. Most candidates handled the inter-spouse transfer correctly. Part (ii) was a
test of the ability of candidates to identify their relevant knowledge of the basics of corporation tax and to summarise it in
an appropriate manner. This should have been a straightforward requirement and for many candidates it was. However,
some candidates failed to stick to the point and so addressed unnecessary areas (for example group losses) whilst failing
to cover all of the required issues. There was also a failure to use the information in the question (for example, the
predicted profit levels) in order to ensure that the comments made were specific to this particular company. The transfer
pricing aspect of this part was handled well. Part (iii) required the consideration of a number of aspects of VAT and was
done well. As always, weaker candidates could not resist writing down everything they knew rather than simply answering
the question, particularly in connection with group registration.
【答案解析】