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问答题

问答题Ava has not yet submitted her income tax return for the tax year 2011/12. She also requires advice on the capital gains tax and inheritance tax implications of making a gift of a farm to her nephew. The following information has been obtained from a letter from Ava and from her client file. Ava's personal circumstances: - Ava is 84 years old. - Ava's husband, Butt, died on 1 November 2013 after a long and serious illness. - Ava has no children. Ava's income tax reporting: - Burt had always looked after Ava's tax affairs as well as his own. - Ava has recently realised that her income tax return for the tax year 2011/12 has not been submitted. - The notice to file the income tax return for the tax year 2011/12 was sent to Ava on 1 May 2012. Bud's will and lifetime gifts: - Burt made no transfers for the purposes of inheritance tax during his lifetime. - Butt left quoted shares worth ￡293,000 to his sister. - Butt left 'Hayworth', a small farm, and the residue of his estate to Ava. - Consequently, his chargeable death estate was less than his nil rate band. Ava's lifetime gifts: - Ava made a gift of quoted company shares (all minority holdings) worth ￡251,000 to her niece on 1 December 2012. - Ava intends to gift Hayworth Farm to her nephew on 1 February 2014. - Capital gains tax gift relief will not be claimed in respect of the intended gift. - Ava is a higher rate taxpayer. Hayworth Farm: - Is situated in the UK. - Was purchased by Burt on 1 January 2004 for ￡330,000. - Was leased to tenant farmers on 1 January 2005 and was never farmed by Burt. - Will continue to be leased to and farmed by the tenant farmers in the future. Hayworth Farm - Valuations of farm buildings and surrounding land: 1 November 2013 1 February 2014 ￡ ￡ Market value 494,000 650,000 Agricultural value 300,000 445,000 - It can be assumed that both values will increase by 5% per year from 1 February 2014. Required (a) State by when Ava's 2011/12 income tax return should have been submitted and list the consequences of submitting the return, together with Ava's outstanding income tax liability, on 15 December 2013. Note: you are not required to prepare calculations for part (a) of this question. (b) (i) Provide a reasoned explanation for the availability or non-availability of agricultural property relief and business property relief in respect of the intended gift of Hayworth Farm by Ava. (ii) Calculate the capital gains tax and the inheritance tax payable in respect of the gift of Hayworth Farm on the assumption that Ava dies on 1 January 2018. State the due dates for the payment of the tax liabilities (on the assumption that they are not paid in instalments), the date on which any beneficial claim(s) need to be submitted and any assumptions made. You should assume that the tax rates and allowances for the tax year 2011/12 will continue to apply for the foreseeable future.

问答题Trifles Ltd intends to carry out a purchase of its own shares. The shareholders from whom the shares are to be purchased require advice on their tax position. Trifles Ltd also intends to loan a motorcycle to one of the shareholders. The following information has been obtained from the shareholders in Trifles Ltd. Trifles Ltd: - Is an unquoted company specialising in the delivery of small, high value items. - Was incorporated and began trading on 1 February 2005. - Has an issued share capital of 10,000 ordinary shares subscribed for at ￡2 per share. - Has four unrelated shareholders: Torte, Baklava, Victoria and Melba. - Intends to purchase some of its own shares from Victoria and Melba. - Victoria and Melba have been directors of the company since they acquired their shares but will resign immediately after the purchase of their shares. The purchase by Trifles Lid of its own shares: - Will take place on 28 February 2013 for Victoria's shares, and on 31 March 2013 for Melba's shares at an agreed price of ￡30 per share. - Will consist of the purchase of all of Victoria's shares and 450 shares from Melba. Victoria: - Is resident and ordinarily resident in the UK. - Has taxable income of ￡40,000 in 2012/13. - Will make no other capital disposals in the tax year 2012/13. - Has a capital loss carried forward as at 5 April 2012 of ￡3,800. - Will have no link with Trifles Ltd following the purchase of her shares. - Inherited her holding of 1,500 ordinary shares on the death of her husband, Brownie, on 1 February 2011. - Brownie paid ￡16,500 for the shares on 1 February 2009. - The probate value of the 1,500 ordinary shares was ￡16,000 on 1 February 2011. Melba: - Is resident and ordinarily resident in the UK. - Has taxable income of ￡40,000 in 2012/13. - Acquired her holding of 1,700 ordinary shares when Trifles Ltd was incorporated. - Following the purchase of her shares Melba's only link with Trifles Ltd will be her remaining ordinary shareholding and the use of a motorcycle belonging to the company. The motorcycle: - Will be purchased by Trifles Ltd for ￡9,000 on 1 April 2013. - Will be made available on loan to Melba for the whole of the tax year 2013/14. - Melba will pay Trifles Ltd ￡30 per month for the use of the motorcycle. Required (a) Explain whether or not Victoria and/or Melba satisfy the conditions relating to period of ownership and reduction in level of shareholding such that the amount received from Trifles Ltd on the purchase of own shares may be treated as capital. (b) Calculate Victoria's after tax proceeds from the purchase of her shares: - if the amount received is treated as capital; and - if the amount received is treated as income. (c) Explain, with supporting calculations where necessary, the tax implications of the purchase and loan of the motorcycle for both Melba and Trifles Ltd. Note: ignore value added tax (VAT). You should assume that the tax rates and allowances of the tax year 2011/12 and for the financial year to 31 March 2012 will continue to apply for the foreseeable future.

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问答题

问答题

问答题

问答题Faure expects her new business to make a loss in its first trading period. She requires advice on the choice of year end, on the difference between employing her husband in the business, and running the business as a partnership. The following information has been obtained from discussions with Faure. Faure: - Is 44 years old and married to Ravel. - Has not had an income tax liability since the tax year 2003/04. - Intends to start a new business on 1 July 2012 under the trading name 'Bah-Tock'. - 'Bah-Tock' will be Faure's only source of income. The 'Bah-Tock' business: - Is expected to make a loss throughout the first 12 months of trading. - Is expected to be profitable from 1 July 2013 onwards. Structure of the 'Bah-Tock' business: - The business will be unincorporated. - Faure and Ravel will both work full-time on the affairs of the business. - Faure will either employ Ravel, and pay him a commercial salary, or the two of them will run the business as a partnership. Ravel: - Is 47 years old. - Inherited a significant portfolio of quoted shares on the death of his mother in February 2004. - Has annual taxable income, after deduction of the personal allowance, of ￡35,000. - This income consists of bank interest and dividends only. Required: (a) Explain why a year end of 30 June, as opposed to 31 March, is likely to delay the first tax year in which the 'Bah-Tock' business makes a taxable profit rather than an allowable loss. (b) On the assumption that the 'Bah-Tock' business will have a 30 June year end, analyse the issues that Faure and Ravel should be aware of from a tax point of view if: (i) Faure employs Ravel; (ii) Faure and Ravel are partners in the business and summarise your findings. Notes in relation to part (b) 1 Your analysis should be based on the information provided and should be restricted to the situation where the business is loss-making. 2 You should address the effect of the choice of business structure on: - the size of the loss made by the business; - the reliefs available to Faure and Ravel in respect of the initial losses; - the income tax and national insurance contributions liabilities of Faure and Ravel for the tax years 2012/13 and 2013/14. You should assume that the tax rates and allowances of the tax year 2011/12 will continue to apply for the foreseeable future.

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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.