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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问答题Fitzgerald and Morrison, two clients of your firm, require advice on the capital gains tax and inheritance tax implications of gifts they propose to make in the next few months. Fitzgerald Gift of shares in Jay Ltd on 1 October 2012: - To be made to Fitzgerald's nephew, Pat. - Comprises the whole of Fitzgerald's 9% shareholding. - Fitzgerald inherited the shares from his mother on 1 February 2012 when their market value was ￡32,000. - The shares are expected to be worth ￡127,500 on 1 October 2012. - Both Fitzgerald and Pat are higher rate taxpayers. Jay Ltd - An unquoted manufacturing company. - Values of the company's assets as at 1 October 2012 ￡ Premises 740,000 Plant and machinery (each item is worth more than ￡6,000) 160,000 Quoted company shares 250,000 Motor cars 30,000 Net current assets 80,000 Pat's plans: - Pat is an employee of Jay Ltd and will continue to work for the company until he sells the shares. - Pat intends to sell the shares in January 2014 and expects to receive ￡170,000. - He will use the funds to finance a business venture. Morrison Gift of a painting on I September 2012: - To be made to Morrison's daughter, Sula, on her wedding day. - This will be Morrison's first gift since 1 May 2005. - The painting is one of a set of three. - Each of the individual paintings is expected to be worth ￡25,000 on 1 September 2012; a pair of paintings is expected to be worth ￡70,000 on that date. The set of paintings: - Morrison purchased the set of three paintings in April 2004. - Each of the paintings has a base cost for capital gains tax purposes of ￡8,300. - He gave one of the paintings to his wife on 1 May 2005. - The complete set of three paintings is expected to be worth ￡120,000 on 1 September 2012. Required (a) In respect of the gift of the shares by Fitzgerald and their subsequent sale by Pat: (i) Explain whether or not capital gains tax gift relief will be available on the gift, noting any additional information required. State the latest date for submission of a claim and identify who must sign it; (ii) Calculate the effect of submitting a valid claim for gift relief on the total capital gains tax liability of Fitzgerald and Pat on the assumption that the gift by Fitzgerald and the sale by Pat take place as (iii) Explain whether or not business property relief will be available if Fitzgerald dies within seven years of making the gift. (b) In respect of the gift of the painting by Morrison: (i) Calculate the value of the potentially exempt transfer, after deduction of all exemptions, for the purposes of inheritance tax; (ii) Calculate the capital gain arising on the gift and comment on the availability of gift relief. Assume that the tax rules and rates for 2011/12 continue to apply in subsequent years.

问答题An extract from an e-mail from your manager is set out below. I attach a letter from Frank Coltrane who is about to sell the unincorporated business (known as 'Alto') that he has owned and operated since 2005. I would like you to prepare notes on the tax issues raised by Frank for me to use at a meeting we are going to have later this week. I set out below some thoughts I have had which you should refer to when preparing your notes. (i) Capital gains tax I have calculated that Frank's capital gains on the sale of the unincorporated business will be ￡420,000 and I'd like you to assume that the Tenor plc shares will be sold for ￡1,400,000 on 31 July 2015. Because the sale of Alto will be Frank's only chance to get entrepreneurs' relief we have agreed that he will disclaim incorporation relief so please prepare your calculations on this basis. By the way, Frank has capital losses brought forward as at 6 April 2012 of ￡154,500. Frank may be willing to gift some shares in Tenor plc to his wife prior to both of them selling their shares on 31 July 2015. Please include a summary of all of the tax implications of such a gift and the maximum potential tax saving. Both Frank and his wife are resident, ordinarily resident and domiciled in the UK. You can assume that Frank and his wife will be higher rate taxpayers in 2015/16. (ii) Corporation tax Keep your comments brief and specific to Soprano Ltd. Soprano Ltd has trading losses brought forward as at 1 August 2011 of ￡65,000. I have reviewed the consolidated financial statements of Tenor plc and can confirm that the group is large for all aspects of corporation tax. (iii) Value added tax (VAT) Don't forget that the supply of baby clothes is zero rated. Please keep your notes brief and clear so that I can find my way around them during the meeting. Alice The letter from Frank Coltrane is set out below. 1 Garden Walk Manchester Ms A Peters F (ii) Aspects of corporation tax; (iii) Aspects of value added tax. Professional marks will be awarded for the appropriateness of the format and presentation of the notes and the effectiveness with which the information is communicated. Assume that the tax rules and rates for 2011/12 and Financial Year 2011 continue to apply in subsequent years.

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