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.

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问答题