问答题 You have recently been approached to act as an accountant for Styrax, aged 32, who is self-employed.
The following information has been extracted from client files and from meetings with Styrax. You should assume
that today's date is 15 March 2012.
Styrax:
· Annual trading profits have been fairly constant at approximately ￡20,000 for the last few years.
· Has building society savings amounting to around ￡12,000 which generate gross annual interest of
approximately ￡400.
· Wife, Salvia, is aged 28, is expecting their first child and has recently given up employed work.
· The couple has no other sources of income.
· Disposable income is about ￡3,000 pa after paying their mortgage and living expenses.
Investment strategy:
· Neither Styrax nor his wife have made, and for the present do not wish to start making, any pension
provision.
· Risk averse.
Stryax's brother, Taxus:
· Single.
· Prepared to take medium to high risk in his investments.
· Already has a portfolio of investments and wishes to shelter some of his gains.
· Considering investing in the Enterprise Investment Scheme (EIS) and in Venture Capital Trusts (VCTs).
Required
(a) (i) Prepare notes for a meeting with Styrax setting out any measures that could be undertaken by the
couple in order to reduce their income tax and national insurance liabilities following Salvia leaving
her employment.
You should assume that Styrax does not wish to incorporate his business and that Salvia does not
wish to join him in partnership.
Detailed income tax computations are not required in this question part.
(ii) Explain the options open to the couple regarding making future pension provision.
You should assume that the tax rates and allowances for 2011/12 apply throughout.
(b) Write a memorandum to Taxus setting out the features of the EIS and VCTs. You should include details of
the risk and taxation implications of each type of investment.