【正确答案】Provision of a laptop computer for Jed Option 1: Purchase of a new laptop computer Nocturne Ltd is a close company as it is controlled by any three of its four shareholders. As Jed is not a director or employee of Nocturne Ltd, the provision of the laptop computer will not be treated as a benefit in kind, but as a distribution. Nocturne Ltd will not be able to claim capital allowances in respect of the new laptop computer and there will be no national insurance contribution implications. No further capital allowances are available to Nocturne Ltd in respect of the existing laptop computer as its tax written down value is already ￡nil. The after-tax cost of Option 1 is the cost of the laptop computer of ￡1,800. Option 2: Transfer of an existing laptop computer The disposal of the laptop computer to Jed will give rise to a balancing charge in Nocturne Ltd of ￡150 (market value – tax written down value of main pool). This will give rise to an additional corporation tax liability of ￡30 (￡150 x 20%) The laptop computer is an exempt asset for capital gains tax purposes, as it is a chattel which cost and is worth no more than ￡6,000. The new laptop computer to be used in the business will be eligible for capital allowances. The annual investment allowance is available for the full amount of the expenditure, so the corporation tax relief in the year ending 31 March 2016 will be ￡360 (￡1,800 x 20%). Therefore the net cost will be ￡1,440 (￡1,800 – ￡360) The after-tax cost of Option 2 is ￡1,470 (￡1,440 + ￡30). Option 2 is therefore the preferable option for Nocturne Ltd.

【正确答案】Provision of loan finance by Siglio Siglio will receive interest on the loan from Nocturne Ltd net of a 20% income tax deduction. It will be taxed as savings income in Siglio’s income tax computation at his marginal rate of tax, but with credit given for the tax deducted at source. As Siglio has taken out a loan to provide the loan finance to Nocturne Ltd, he will be able to obtain tax relief on the interest paid on the loan because the following conditions are satisfied: – Nocturne Ltd is a close company; and – Siglio owns at least 5% of the shares in Nocturne Ltd. Also, as he is the company’s managing director, it is highly likely that he works full time for Nocturne Ltd. Therefore, Siglio will be able to deduct the interest paid on the bank loan in calculating his taxable income each year.

【正确答案】(i) Recoverable input VAT for the year ended 31 March 2015 Applying the de minimis tests to the annual figures provided: Test 1 Total input VAT is ￡13,132 (￡7,920 + ￡1,062 + ￡4,150) Although the value of the exempt supplies is less than 50% of the total supplies, the total input VAT is above the de minimis limit of ￡7,500 (￡625 x 12) so Test 1 is not satisfied. Test 2 Total input VAT less input VAT directly attributed to taxable supplies is ￡5,212 (￡13,132 – ￡7,920). This is below the de minimis limit of ￡7,500 and the value of exempt supplies is less than 50% of the total supplies so Test 2 is satisfied and all the input VAT incurred of ￡13,132 is reclaimable. (ii) Annual test The annual test allows a business to apply the de minimis tests once a year instead of for every VAT return period. The conditions to be satisfied are: 1. The business must have been de minimis in the previous partial exemption year; 2. The business will consistently apply the annual test throughout any given partial exemption year; and 3. There are reasonable grounds to expect that the input tax incurred by the business in the current partial exemption year will not exceed ￡1 million. Nocturne Ltd satisfied the de minimis condition in respect of the partial exemption year ended 31 March 2015 (condition (1)) and there is no reason to believe that conditions (2) and (3) will not be met in relation to the partial exemption year ending 31 March 2016. The benefits for Nocturne Ltd result from a provisional recovery of all input tax during the partial exemption year ending 31 March 2016 as the company can recover the full amount of input tax suffered in each return period without performing calculations to see if the de minimis tests are satisfied each time. This will provide a cash flow benefit and an administrative time saving. This administrative time saving is particularly useful as Nocturne Ltd’s turnover and associated costs are expected to increase in the year ended 31 March 2016, such that the simplified de minimis tests 1 and 2 may not be satisfied and the more complicated de minimis test 3 might otherwise be required. Notwithstanding these benefits, an annual adjustment will have to be performed at the end of the year using the de minimis limits for the year as a whole, which may result in the need to repay part of the VAT previously recovered in full.