问答题
Ellroy started an unincorporated business on 1 October 2012. He requires advice on his choice of accounting date,
a possible change of accounting date and the use of the flat rate scheme for the purposes of VAT (value added tax).
The following information has been obtained from telephone conversations with Ellroy.
Ellroy:
- Is 47 years old.
- Is considering either a 31 March or a 30 September year end in 2013 and future years for his new business.
- Receives a share of profits from a partnership of more than ￡50,000 per year.
The budgeted trading profits of the business:
- It should be assumed that the profits set out below will accrue evenly in each trading period.
- The profits before deduction of capital allowances but after all other tax adjustments have been made are:
￡
Six months ending 31 March 2013 13,100
Year ending 31 March 2014 87,200
Year ending 31 March 2015 74,400
- Ellroy's only capital expenditure will be the purchase of three vans at a total cost of ￡32,000 in June 2013.
The VAT position of the business:
- The budgeted annual turnover and expenses of the fully established business are:
￡
Turnover (all standard rated) 100,000
Expenses: standard rated 21,000
zero rated 3,000
outside the scope of VAT 5,000
- All the figures exclude VAT.
Required
(a) (i) Calculate the difference in the total income tax and national insurance that will be payable by Ellroy
for the first three tax years of the business depending on whether he adopts a 31 March or 30
September year end.
(ii) Explain the tax implications, including the effect on Ellroy's taxable profits for 2015/16 if, having
initially adopted a 31 March year end, he were to change his accounting date and prepare accounts
for the six months ending 30 September 2015. You should consider the possibility of both rising and
falling levels of profitability.
(b) Explain, by reference to the budgeted annual turnover and expenses of the fully established business and
with the aid of supporting calculations, the maximum flat rate percentage that can apply to Ellroy's business
such that it would be financially beneficial for him to join the flat rate scheme.
Note: you should ignore the 1% discount for the first 12 months of registration.
You should assume that the tax rates and allowances for the tax year 2011/12 will continue to apply for the
foreseeable future.
a possible change of accounting date and the use of the flat rate scheme for the purposes of VAT (value added tax).
The following information has been obtained from telephone conversations with Ellroy.
Ellroy:
- Is 47 years old.
- Is considering either a 31 March or a 30 September year end in 2013 and future years for his new business.
- Receives a share of profits from a partnership of more than ￡50,000 per year.
The budgeted trading profits of the business:
- It should be assumed that the profits set out below will accrue evenly in each trading period.
- The profits before deduction of capital allowances but after all other tax adjustments have been made are:
￡
Six months ending 31 March 2013 13,100
Year ending 31 March 2014 87,200
Year ending 31 March 2015 74,400
- Ellroy's only capital expenditure will be the purchase of three vans at a total cost of ￡32,000 in June 2013.
The VAT position of the business:
- The budgeted annual turnover and expenses of the fully established business are:
￡
Turnover (all standard rated) 100,000
Expenses: standard rated 21,000
zero rated 3,000
outside the scope of VAT 5,000
- All the figures exclude VAT.
Required
(a) (i) Calculate the difference in the total income tax and national insurance that will be payable by Ellroy
for the first three tax years of the business depending on whether he adopts a 31 March or 30
September year end.
(ii) Explain the tax implications, including the effect on Ellroy's taxable profits for 2015/16 if, having
initially adopted a 31 March year end, he were to change his accounting date and prepare accounts
for the six months ending 30 September 2015. You should consider the possibility of both rising and
falling levels of profitability.
(b) Explain, by reference to the budgeted annual turnover and expenses of the fully established business and
with the aid of supporting calculations, the maximum flat rate percentage that can apply to Ellroy's business
such that it would be financially beneficial for him to join the flat rate scheme.
Note: you should ignore the 1% discount for the first 12 months of registration.
You should assume that the tax rates and allowances for the tax year 2011/12 will continue to apply for the
foreseeable future.
【正确答案】Text references. Trade profits are covered in Chapter 6. VAT is dealt with in Chapter 28 and 29.
Top tips. Read all the information in the question very carefully. In this case, you were told that the taxpayer already
had income which meant that he was a higher rate taxpayer for income tax and above the upper threshold for NIOs.
This made the calculation of extra income tax and NIOs very simple.
Easy marks. The calculation of VAT under the normal rules and under the flat rate scheme should have been easy
marks.
Examiner's comments. Part (a) concerned the various aspects of the trader's year end and was in two parts.
Part (i) required calculations of the difference in the trader's tax liability depending on the year end adopted. This
was not hard but it was not done particularly well. Many candidates failed to give the annual investment allowance
on the vans and were also unable to apply the opening year rules to the facts of the question. In addition, many
candidates would have benefited by thinking before they started calculating. The trader was a higher rate taxpayer
so it was not necessary to prepare any income tax computations; it was merely necessary to calculate the difference
in the taxable profits by reference to each of the two year ends and then to multiply by 42%.
Part (ii) required explanations of the tax implications of a change of accounting date. This was the more difficult
part of the question and was not done well. In particular, candidates needed to think rather than write in order to
come up with sensible points to say but most were unable to explain the implications well.
Part (b) concerned VAT and the flat rate scheme and was done reasonably well. Again, however, it required some
thought in order to solve the problem and many candidates chose to write down everything they knew about the
scheme, most of which did not earn marks, rather than trying to answer the question set.
Top tips. Read all the information in the question very carefully. In this case, you were told that the taxpayer already
had income which meant that he was a higher rate taxpayer for income tax and above the upper threshold for NIOs.
This made the calculation of extra income tax and NIOs very simple.
Easy marks. The calculation of VAT under the normal rules and under the flat rate scheme should have been easy
marks.
Examiner's comments. Part (a) concerned the various aspects of the trader's year end and was in two parts.
Part (i) required calculations of the difference in the trader's tax liability depending on the year end adopted. This
was not hard but it was not done particularly well. Many candidates failed to give the annual investment allowance
on the vans and were also unable to apply the opening year rules to the facts of the question. In addition, many
candidates would have benefited by thinking before they started calculating. The trader was a higher rate taxpayer
so it was not necessary to prepare any income tax computations; it was merely necessary to calculate the difference
in the taxable profits by reference to each of the two year ends and then to multiply by 42%.
Part (ii) required explanations of the tax implications of a change of accounting date. This was the more difficult
part of the question and was not done well. In particular, candidates needed to think rather than write in order to
come up with sensible points to say but most were unable to explain the implications well.
Part (b) concerned VAT and the flat rate scheme and was done reasonably well. Again, however, it required some
thought in order to solve the problem and many candidates chose to write down everything they knew about the
scheme, most of which did not earn marks, rather than trying to answer the question set.
【答案解析】