问答题

问答题

问答题

问答题

问答题

问答题

问答题(c) Advise Ravi on the options available to him for calculating his UK capital gains tax liability for the tax year 2014/15. Provide supporting calculations of the tax payable by him in each case. (6 marks)

问答题YourmanagerhashadameetingwithFredKildow,thefinancedirectorofMillerplc,andhassentyouacopyofthefollowingmemorandum.ToThefilesFromTaxmanagerDate1June2012SubjectMillerPIcTosimplifythegroupfinancefunctionFredKildowhasmovedallcompaniesinthegrouptothesameaccountingyearend.Millerplc'saccountingdateduring2012hasthereforechangedfrom31Julyto31March.1August2011to31March2012Theincomestatementfortheperiodfrom1August2011to31March2012showsaprofitof￡450,000afteraccountingforthefollowingitems:￡Lossondisposalofmachinery(Note1)30,000GiftAiddonationaccrued(paid1April2012)10,000UKrentalincome45,000Advertising(Note2)60,000Interestchargedonoverduecorporationtax3,000Dividendincome(Note3)75,000Debentureinterestreceivable(Note3)9,000Note1Themachineryhadbeenusedinthebusinessandcapitalallowanceshadbeenclaimed.Ithadoriginallycost￡86,000inJanuary2001andwassoldfor￡62,800inOctober2011.Atthetimeofpurchase,installationcostsof￡10,000werechargedinadditiontothepurchaseprice.Note2Theadvertisingincluded￡37,750forthehireofacorporateentertainmentboxatasportingevent.Thecostwasforthehireoftheboxandallfoodanddrink.Duringtheevent,Millerplcdisplayeditscorporatelogointhewindowofthebox.Note3InSeptember2011,Millerplcreceivedadividendof￡13,500fromBodeLtd,￡27,000fromHillmanLtdand￡34,500fromVogtliInc.ThedividendfromVogtliIncwasreceivedgrossasitwasnotsubjecttoanywithholdingtax.Millerplcalsoreceivedinterestof￡9,000onadebentureloantoBodeLtd.ItemsnotincludedintheincomestatementMillerplcincurredgeneralexpensesof￡11,550fromthemanagementofitsvariousinvestments.MillerplcsolditsentireholdinginVogtliIncfor￡120,000on31January2012.CapitalacquisitionsMillerplcpurchasedaMercedescaron1August2011for￡28,000whichhadCO2emissionsof180gperkin.TheMercedescarwaspurchasedforoneofthedirectorswithestimatedprivateusageof25%.On1September2011MillerplcalsopurchasedaJaguarcarfor￡30,000whichhadCO2emissionsoflOOgperkmandnewofficefurnitureatacostof￡83,417.TheannualinvestmentallowanceforthegroupistobeclaimedbyMillerplc.Forecastgroupresults-yearended31March2013FredKildowwillbesendingacopyofthegroup'sforecastresultsfortheyearended31March2013.HeadvisedthatBloomLtdislikelytobreakevenin2014.From2015onwardsBloomLtdexpectstoreachtradingprofitlevelsofatleast￡500,000perannum.Theothergroupcompaniesdonotexpecttheirincomelevelstochange.ThecapitallossshownforWeinbrechtLtdaroseonthesaleofanofficebuildinginNovember2012toanon-associatedcompany.TaxmanagerAnextractfromanemailfromyourmanagerissetoutbelow.PleaseprepareareporttoFredKildowsettingoutthefollowing:1CorporationtaxliabilityProvideacalculationofMillerplc'scorporationtaxliabilityfortheperiodended31March2012.IhavecalculatedtheindexedriseontheholdinginVogtliIncfromMarch2001toJanuary2012tobe￡9,725.2GroupissuesState,withreasons,thenatureoftherelationshipsthatexistbetweenthevariouscompaniesforcorporationtaxpurposesintheyearending31March2013.OnthebasisthatFredKildowwantstominimisethegroup'staxliabilityoverthelong-term,explaintheoptionsavailabletoutilisethelosseswithinthegroupintheyearending31March2013andstatetheoptimumuseforeachloss.Youdonotneedtocalculatethecorporationtaxpayable.3VATAdviseonthebenefitsofaVATgroupandexplainwhichcompanies,ifany,shouldorshouldnotbeincludedinaVATgroupregistration.Youhaveextractedthefollowingfurtherinformationfromclientfiles.·TheMillerplcgroupoperatesavarietyofrelatedbusinessesaimedatretailcustomers.·Thegroupisasfollows:Millerplchadbroughtforwardtradinglossesof￡95,000at1August2011.Thetaxwritten-downvalueofMillerplc'smainpoolon1August2011was￡270,000.TheholdinginVogtliIncwasacquiredinMarch2001atacostof￡35,000.ForVATpurposesMillerplc,BodeLtd,andHillmanLtdallmakewhollystandardratedsupplieswithintheUK.·95%ofBloomLtd'ssalesaretolargebusinessesintheEuropeanUnion.·WeinbrechtLtdspecialisesinthesupplyofinsuranceservicesandisthereforewhollyexemptfromVAT.Acopyoftheforecastresultsarrivesshowingthefollowing.MillerplcBodeLtdHillmanLtdWeinbrechtLtdBloomLtd￡￡￡￡￡Tradingprofit/(Loss)320,000125,00076,000101,000(600,000)Chargeablegains/(Loss)100,000(45,000)35,000Propertybusinessincome70,000Interestincome10,00060,00020,000Tradinglossesb/f(50,000)RequiredPreparethereportrequestedbyyourmanagertoFredKildow.Marksareallocatedasfollows.(a)CorporationtaxliabilityCalculateMillerplc'scorporationtaxliabilityfortheperiodended31March2012.(b)GroupissuesState,withreasons,thenatureoftherelationshipsthatexistbetweenthevariouscompaniesforcorporationtaxpurposesintheyearending31March2013andbrieflyoutlinetheconsequences.Explaintheoptionsavailabletoutilisethelosseswithinthegroupintheyearending31March2013andstatetheoptimumuseforeachloss.(c)VATAdviseonthebenefitsofaVATgroup.Explainwhichcompanies,ifany,shouldorshouldnotbeincludedinaVATgroupregistration.Appropriatenessoftheformatandpresentationofthenotesandtheeffectivenesswithwhichtheircontentiscommunicated.YoumayassumethattheratesandallowancesfortheFinancialYear2011continuetoapplyfortheforeseeablefuture.