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问答题Your manager has had a meeting with Pilar Mareno, a self-employed consultant, and has sent you a copy of the following memorandum. To The files From Tax manager Date 31 May 2012 Subject Pilar Mareno-Business expansion Pilar Mareno (PM) has been offered a contract with DWM plc, initially for two years, which will result in fees of ￡80,000 plus VAT per annum. In order to service this contract, PM would have to take on additional help in the form of either a part-time employee for two days a week, or the services of a self-employed contractor for 100 days per year. She would also have to acquire a van, which would be used wholly for business purposes. PM has decided that she will only enter into the contract if it generates at least an additional ￡15,000 per annum, on average, for the family after all costs and taxes. PM's annual profitability and the profit generated by the contract (before taking into account the costs of the part- time employee/contractor and the van) are summarised below. Existing New business contract ￡ ￡ Sales 210,000 80,000 Less: Materials, wages and overheads (120,000) (35,000) Profit per accounts and taxable profit 90,000 45,000 Supplies made under the contract will be 65% standard rated and 35% exempt for value added tax (VAT) purposes; this is the same as for PM's existing business. ￡31,500 of the costs incurred in relation to the contract will be subject to VAT at the standard rate. The equivalent figure for PM's existing business is ￡100,000. PM has identified Max Wallen (MW) as a possible self-employed contractor. MW would charge ￡70 per day plus VAT for a contract of 100 days per year, with a rate of ￡20 per day plus VAT in respect of any days when he is ill (up to a maximum of eight days per year). PM has a spare copy of the specialist software that MW would need but MW would use his own laptop computer. Alternatively, PM could employ her husband, Alec (AM), paying him a gross annual salary of ￡7,600. AM would have to give up his current full-time job, but would expect to do other part-time employed work earning a further ￡10,000 (gross) per annum. PM estimates that a second hand van will cost ￡7,800 plus VAT or alternatively, a van could be leased for ￡300 plus VAT per month. We can assume that if the van is purchased, it will be sold at the end of the two-year contract for ￡2,500 plus VAT. Tax manager An extract from an email from your manager is set out below. Please prepare a memorandum for me, incorporating the following: 1 Calculations to demonstrate whether or not Pilar's desired annual after tax income from the new contract will be achievable depending on: · whether she leases or buys the van; and · whether she employs Alec or uses Max Wallen. You may find it easier to: (i) work out the after tax cost of buying or leasing the van. (When calculating the annual cost of the van, assume that the total cost can be averaged over the two years of the contract.) and then to consider: (ii) the after tax income depending on whether Alec is employed or the self-employed contractor, Max, is used. 2 A rationale for the approach you have taken and a summary of your findings. 3 Any other issues we should be considering in respect of Pilar employing Alec, including any alternative to employment. 4 It seems to me that HM Revenue and Customs may be able to successfully contend that Max Wallen would be an employee, rather than a self-employed contractor. Prepare your figures on the basis that he is self- employed but include a list of factors in your memorandum, based on the information we have, that would indicate either employed or self-employed status. Take some time to think about your approach to this before you start. Also, as always when working on Pilar's affairs, watch out for the VAT as it can get quite tricky. I suspect the VAT will affect the costs incurred so you'll need to address VAT first. Pilar's estimate of the profit on the contract will have ignored these complications. Tax manager You have extracted the following further information from Pilar Mareno's client file. · None of Pilar's VAT inputs is directly attributable to either standard rated or exempt supplies. · Alec has worked for a UK bank for many years and is currently paid an annual salary of ￡17,000. · The couple have no sources of income other than those set out above. Required Prepare the memorandum requested by your manager. Marks are available for the four components of the memorandum as follows: (1) Relevant calculations. (2) Rationale for the approach taken and summary of findings. (3) Other issues in respect of Pilar employing Alec, together with any suggestions as to an alternative to employment. (4) The employment status of Max Wallen. Appropriateness of the format and presentation of the memorandum and the effectiveness with which the information is communicated. You may assume that the rates and allowances for the tax year 2011/12 will continue to apply for the foreseeable future.

问答题Ernest intends to sell a capital asset on 1 February 2013 and wishes to maximise his after tax sales proceeds He is also seeking advice on his inheritance tax position and on his will. The following information has been obtained from a telephone conversation with Ernest and from client files. Ernest: - Is 54 years old and unmarried. - Lives with Georgina, who is 48 years old, and her adult daughter, Eileen. - Earns a salary of ￡130,000 per year. - Has as yet made no disposals of capital assets in the tax year 2012/13. - Intends to sell either an oil painting or 7,700 shares in Neutron Ltd on 1 February 2013 Oil painting: - Ernest inherited the painting on the death of his uncle on 1 May 2007 when it was worth ￡23,300. - Ernest's uncle purchased the painting on 1 July 1993 for ￡19,500. - The painting is expected to be worth ￡47,000 on 1 February 2013. Shares in Neutron Ltd: - Qualified for income tax relief under the enterprise investment scheme (EIS) although Ernest did not claim any relief. - 1 April 2004 Ernest subscribed for 18,600 shares at ￡8.90 per share. - 1 March 2006 Ernest received a 1 for 4 bonus issue. - 1 July 2009 Ernest purchased his full entitlement under a 1 for 10 rights issue at ￡4.20 per share. - The shares are expected to be worth ￡5 each on 1 February 2013. Neutron Lid: - Has an issued share capital of two million ￡1 ordinary shares. - Is not quoted on any stock exchange. - Manufactures and distributes radiation measuring equipment. Inheritance tax planning and wills: - Neither Ernest nor Georgina have made any lifetime gifts. - In his will, Ernest has left the whole of his estate to Georgina. - In her will, Georgina has left the whole of her estate to Eileen. - Ernest and Georgina wish to minimise their total inheritance tax liability. - They are willing to make lifetime gifts to each other but not to Eileen or any other person or organisation. Current market values of assets owned: Ernest Georgina ￡ ￡ Family home 620,000 - Antiques and works of art 400,000 60,000 Investment property 380,000 - Shares in Neutron Ltd 127,875 - Required (a) Prepare calculations of the after tax sales proceeds that would be realised on the proposed sale of the painting and on the proposed sale of the shares on 1 February 2013. Note: you should assume that Ernest will make any necessary beneficial claims or elections. (b) Prepare brief notes explaining the inheritance tax liabilities that will arise on the deaths of Ernest and Georgina if no action is taken to reduce such liabilities; identify any actions that could be taken in order to reduce these liabilities and explain the inheritance tax and capital gains tax implications of these actions. Note: you are not required to prepare calculations for part (b) of this question. Assume that the tax rules and rates for 2011/12 continue to apply in subsequent years.

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问答题You have recently been approached by Fred Flop. Fred informs you that he is experiencing problems in dealing with aspects of his company tax returns. The company accountant has been unable to keep up-to-date with matters, and Fred also believes that mistakes have been made in the past. Fred needs assistance. The following information has been extracted from client files and from meetings with the shareholders. Assume that today's date is 20 May 2013. Fred Flop: · 100% shareholder of Flop Limited. · Managing director. Flop Limited: · UK trading company. · Taxable profits of ￡595,000 in the year ended 31 March 2010. · Has one wholly owned subsidiary. · Both companies have a 31 March year-end. Corporation tax return (CT600) for the year ended 31 March 2011: · The corporation tax return for this period was not submitted until 2 November 2012, and corporation tax of ￡123,500 was paid at the same time. Taxable total profits were stated as ￡741,800. · A formal notice (0T203) requiring the company to file a self-assessment corporation tax return (dated 1 February 2012) had been received by the company on 4 February 2012. Examination of the accounts and tax computation for the year ended 31 March 2011: · A ￡10,000 repairs provision was made; there is no supporting information. · ￡46,500 legal and professional fees allowed in full without any explanation. Fred has subsequently produced the following analysis: Analysis of legal & professional fees ￡ Legal fees on a failed attempt to secure a trading loan 5,000 Debt collection agency fees 12,800 Obtaining planning consent for building extension 5,700 Accountant's fees for preparing accounts 14,000 Legal fees relating to a trade dispute 9,000 · No enquiry has yet been raised by HMRC. CT600 for the year ended 31 March 2012: · Has not been submitted yet. · Accounts are late and nearing completion, with only one change still to be made. · A notice requiring the company to file a self-assessment corporation tax return (0T203) dated 27 July 2012 was received on 1 August 2012. No corporation tax has yet been paid. · Computation currently shows taxable total profits of ￡815,000 before accounting adjustments. · A company owing Flop Ltd ￡50,000 (excluding VAT) has gone into liquidation, and it is unlikely that any of this money will be paid. The money has been outstanding since 3 September 2011 (which was also the tax point for the supply), and the impairment loss (bad debt) will need to be included in the accounts. · Computer equipment totalling ￡50,000 had been expensed in the accounts. No adjustment has been made in the tax computation. The annual investment allowance has already been used during the year ended 31 March 2012. VAT issues: · VAT return for the quarter ended 31 March 2013 was submitted on 15 May 2013, and VAT of ￡24,000 was paid at the same time. · Previous return to 31 December 2012 was also submitted late. · No account has been made for VAT on the bad debt. · VAT return for 30 June 2013 may also be late. Estimated VAT liability is ￡8,250. Required (a) (i) Calculate the revised corporation tax (CT) payable for the accounting periods ending 31 March 2011 and 2012 respectively. Your answer should include an explanation of the adjustments made as a result of the information which has now come to light and the practical steps needed to correct the position. (ii) State, giving reasons, the due payment date of the corporation tax (CT) and the filing date of the corporation tax return for each period, and identify any interest and penalties which may have arisen to date. Assume that the rates and allowances for Financial Year 2011 apply throughout this part and interest on overdue tax is 3%. (b) Explain the consequences of filing the VAT returns late and advise Fred how he should deal with the underpayment and bad debt for VAT purposes. Your explanation should be supported by relevant calculations.

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