问答题Fedora wants to improve the overall financial position of his family and his company, Smoke Ltd. He is considering three possibilities: repaying a loan to the company, employing his wife, Wanda, in the business, and selling a piece of land owned by the company. The following information has been obtained from a telephone conversation with Fedora and from client files. Fedora: - Fedora's only income is his annual salary of ￡80,000 from Smoke Ltd together with annual taxable benefits of ￡6,600. - Fedora is aged 49. Smoke Ltd: - Is wholly owned by Fedora. - Manufactures precision engineering tools. - Has a year end of 31 March and pays corporation tax at the small profits rate. Fedora's plans: - Repay an interest-free loan of ￡18,400 made to him by Smoke Ltd in February 2007. - Smoke Ltd to employ Wanda. - Smoke Ltd to sell part of the land surrounding its factory. Smoke Ltd to employ Wanda: - Wanda would carry out duties currently performed by Fedora and would be paid an annual salary of ￡20,000. - Wanda's Salary would represent an arm's length price for the work that she would perform. - Fedora's salary would be reduced by ￡20,000 to reflect the reduction in the level of his duties. - Wanda's only income is bank interest of ￡1,470 per year. She has notified the bank that she is a non- taxpayer. - Wanda is aged 43. Smoke Lid to sell land: - The land is currently used by Smoke Ltd for parking vehicles. - The land was purchased together with the factory on 1 April 1995 for ￡174,000. - The land would be sold on 1 February 2013 for ￡22,000. - The value of the factory together with the remaining unsold land on 1 February 2013 will be ￡491,000. - Smoke Ltd will use ￡19,000 of the sales proceeds to acquire engineering machinery in March 2013. Required (a) Explain, with the aid of supporting calculations, the tax implications for both Fedora and Smoke Ltd of the proposed repayment by Fedora of the loan from Smoke Ltd. (b) Calculate the annual net effect on the total of the tax liabilities of Fedora, Wanda and Smoke Ltd of Smoke Ltd employing Wanda under the arrangements set out above. (c) Calculate the taxable gain arising on the sale of the land in the year ending 31 March 2013 on the assumption that any beneficial claim available is made. Explain in detail the beneficial claim available, state the amount of the gain relieved and the manner in which any deferred part of the gain will be charged in the future. You should assume that the tax rules and rates for 2011/12 and Financial Year 2011 continue to apply in subsequent years. Note: The following figures from the Retail Prices Index should be used. April 1995 149.0 February 2013 240.6 (assumed)
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问答题Stanley Beech, a self-employed landscape gardener, intends to transfer his business to Landscape Ltd, a company formed for this purpose. The following information has been extracted from client files and from meetings with Stanley. Stanley: · Acquired a storage building for ￡46,000 on 1 July 2002 and began trading. · Has no other sources of income. · Has capital losses brought forward from 2006/07 of ￡10,900. The whole of the business is to be transferred to Landscape Ltd on I September 2012: · The market value of the assets to be transferred is ￡118,000. · The assets include the storage building and goodwill, valued at ￡87,000 and ￡24,000 respectively, and various small pieces of equipment and consumable stores. · Landscape Ltd will issue 5,000 ￡1 ordinary shares as consideration for the transfer. Advice given to Stanley in respect of the sale of the business: · 'No capital gains tax will arise on the transfer of your business to the company.' · 'You should take approximately 30% of the payment from Landscape Ltd in shares with the balance left on a loan account payable to you by the company, such that you can receive a cash payment in the future.' Advice given to Stanley in respect of his annual remuneration from Landscape Ltd: · 'The payment of a dividend of ￡21,000 is more tax efficient than paying a salary bonus of ￡21,000 as you will pay income tax at only 25% on the dividend received, whereas you would pay income tax at 40% on a salary bonus. The dividend also avoids the need to pay national insurance contributions.' · 'There is no tax in respect of an interest free loan from an employer of less than ￡5,000.' · 'The provision of a company car is tax neutral as the cost of providing it is deductible in the corporation tax computation.' Stanley's proposed remuneration package from Landscape Ltd: · An annual salary of ￡40,000 and an annual dividend of approximately ￡21,000. · On 1 December 2012 an interest free loan of ￡3,600, which he intends to repay in two years' time. · A company car with list price of ￡19,000. The only costs incurred by the company in respect of this car will be lease rentals of ￡300 per month and business fuel of ￡100 per month. · The annual employment income benefit in respect of the car is to be taken as ￡3,420. Landscape Ltd: · Will prepare accounts to 31 March each year. · Will pay corporation tax at the rate of 20%. Required (a) (i) Explain why there would be no capital gains tax liability on the transfer of Stanley's business to Landscape Ltd in exchange for shares. Calculate the maximum loan account balance that Stanley could receive without giving rise to a capital gains tax liability and state the resulting capital gains tax base cost of the shares. (ii) Explain the benefit to Stanley of taking part of the payment for the sale of his business in the form of a loan account, which is to be paid out in cash at some time in the future. (b) Comment on the accuracy and completeness of the advice received by Stanley in respect of his remuneration package. Supporting calculations are only required in respect of the company car. Ignore value added tax (VAT) in answering this question. You may assume that the rates and allowances for the financial year to 31 March 2012 and the tax year 2011/12 will continue to apply for the foreseeable future.
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