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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.

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问答题An extract from an e-mail from your manager regarding a meeting with a client, Sushi, together with an e-mail from Sushi are set out below. E-mail from your manager I have just had a meeting with Sushi who has been a client of the firm since she moved to the UK from the country of Zakuskia in May 1998. Sushi is 57 years old and was born in the country of Zakuskia. Her father died in 2005 and, as you will see from her e-mail, her mother died in October 2012. Her father and mother were both domiciled and resident in the country of Zakuskia throughout their lives. Zakuskian inheritance tax is charged at the rate of 24% on all land and buildings situated within the country that are owned by an individual at the time of death. There is no capital gains tax in the country of Zakuskia. There is no double tax treaty between the UK and the country of Zakuskia. Until the death of her mother, Sushi's only assets consisted of her house in the UK, a number of investment properties also situated in the UK, and cash in UK bank accounts. Her total UK assets are worth approximately ￡3 million. Sushi has taxable income of ￡40,000 each year and realises taxable capital gains of more than ￡20,000 each year. She has made significant cash gifts to her son in the past and, therefore, does not require an explanation of the taxation of potentially exempt transfers or the accumulation principle. Sushi is resident and ordinarily resident in the UK. I want you to write a letter to Sushi addressing the points below: (i) UK inheritance tax and the statue An explanation of: - The UK inheritance tax implications of the death of Sushi's mother. - Which of Sushi's assets will be subject to UK inheritance tax when she dies. This will require some careful and detailed consideration of her domicile position both now and in the future. - The manner in which UK inheritance tax would be calculated, if due, on any land and buildings situated in the country of Zakuskia that are owned by Sushi when she dies. - Why the gift of the statue to her son, as referred to in her e-mail, will be a potentially exempt transfer, and how this treatment could be avoided. The statue has not increased in value since the death of Sushi's mother. Accordingly, the proposed gift of the statue to Sushi's son will not give rise to a capital gain. (ii) The Zakuskian income The Zakuskian income will be subject to tax in the UK because Sushi is UK resident. Accordingly, we need to think about whether or not Sushi should claim the remittance basis, In order to do this I want you to prepare calculations of the increase in her UK tax liability due to the Zakuskian income on the assumption that the remittance basis is not available and then on the assumption that it is available. You should assume that Sushi remits ￡30,000 (gross) to the UK each year in accordance with her plans. In relation to the taxation of the Zakuskian income, the letter should include explanations of the meaning of the terms 'remittance basis' and 'remittance', and whether or not the remittance basis is available to Sushi, together with your conclusions based on your calculations but no other narrative. You should include brief footnotes to your calculations where necessary to aid understanding of the figures. There is no need to consider the implication of capital gains on overseas assets as Sushi does not intend to dispose of any of her Zakuskian assets, apart from the statue, for the time being. Thank you Tax manager E-mail from Sushi My mother died on 1 October 2012 and left me the whole of her estate. I inherited the following assets. The family home in the country of Zakuskia Investment properties in the country of Zakuskia Cash in Zakuskian bank accounts Paintings and other works of art in the country of Zakuskia The works of art include a statue that has been owned by my family for many years. I intend to bring the statue to the UK in December 2012 and give itto my son on his birthday on 1 July 2013. The statue was valued recently at ￡390,000. The assets inherited from my mother will generate gross annual income of up to ￡60,000 before tax, all of which is subject to 10% Zakuskian income tax. I intend to bring half of this income into the UK each year. The balance will remain in a bank account in Zakuskia. I would like to meet with you to discuss these matters. Thank you for your help. Sushi Required Prepare the letter to Sushi requested in the e-mail from your manager. The following marks are available. (i) UK inheritance tax and the statue; (ii) The Zakuskian income Professional marks will be awarded in this question for the appropriateness of the format of the letter, the degree to which the calculations are approached in a logical manner, and the effectiveness with which the information is communicated. 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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