B Section C Theory Rote Flashcards
How can loss relief be made (past years)
A claim may be made in either year in isolation, or both years in any order
How is loss relief restricted in each year (past years)
To lower of total income or loss
How is loss relief restricted in each year (current and future years)
Relief can be used for the whole or loss remaining unrelieved after claims against total income
Time limit for claim against total income
First anniversary of the end of the tax year of loss
What is the time relief for a terminal loss relief claim?
Within four years of the end of the last tax year of trading
How much PA can be transferred to a spouse?
£1260 or 10% of PA
Penalities on balancing payment for late payment?
One month late
Six months late
If employee is treated as employed in respect of contract? (In relation to PAYE)
Company required to deduct tax under PAYE every time
Advantage of furnished holiday lettings (restriction)
No restriction on finance cost
Advantage of furnished holiday lettings (allowable)
The cost of furniture purchased for use in furnished holiday letting will be an allowable expense under cash basis
Advantage of furnished holiday lettings (relevanmt)
Furnished holiday letting will qualify as relevant earnings for pension tax relief purposes
What is done with a P45?
Provided by employer to employee. Then employee gives to new employer
What is subject matter in badges of trade?
Some assets commonly held as investments for their intrinsic value
What is length of ownership in badges of trade?
If item purchased are sold soon afterwards, this indicates trading transactions
What is frequency of transactions in badges of trade?
Multiple transactions will be interpreted as trading transactions where their frequency indicates the carrying on of a trade
What is work done in badges of trade?
When work is done to make an asset more marketable. This is likely indicative of trading
What is circumstances of realisation in badges of trade?
A forced sale is not likely to be treated as trading
What is motive in badges of trade?
Presence of profit is a strong indication that a person is trading
Signs of employment (long time)
COntract is for relatively long time
Signs of employment (control)
Company exercises control through weekly meetings
Signs of employment (significant expenses)
No significant expenses incurred by employee
Signs of employment (only working)
Employee is only working for that company
Relevant NIC for employed?
Class 1
Relevant NIC for self-employed?
Class 2 and 4
When can HMRC carry out a compliance check?
Regards the completeness and accuracy of any return (e.g. undeclared income)
Which residency test is carried out first?
The automatic non-resident test
Which residency test is carried out second?
Automatic UK resident test
Which residency test is carried out last?
Substantive tests
When is an employer required to submit a full payment submission to HMRC?
Every time a payroll payment is made. The electronic submission should be made on or before the time of the payroll payment
What does the final FPS include?
Year-end accumulations for employees
What is iXBRL for?
The standardised way accounts and computations may be electronically tagged
When is iXBRL a mandatory presentation?
For submissions accompanying the online filing of form CT600 by companies
When is iXBRL not a requirement?
For unincorporated businesses
What does Form P11D detail?
Expenses and benefits provided
When is the time limit for establishing loss relief?
Four years after the end of the tax year of loss
When is the time limit for establishing terminal loss relief?
Within four years of the end of the last tax year of trading
When a claim against total income is made first?
A trading loss can be set against the chargeable gains of the same and/or preceding tax year
When must the trading loss to be set off against chargeable gains be relieved?
After deducting current year capital losses, but before deducting unrelieved capital losses brought forward from earlier tax years and AEA
Factors to be considered for loss relief (rate)
Rate of relief
Factors to be considered for loss relief (capital allowance)
Amount of loss and ability to adjust this by restricting capital allowance claim
Factors to be considered for loss relief (restriction)
Effect of £50,000/25% loss relief restriction
Factors to be considered for loss relief (chargeable)
Amount of chargeable gains available for relief
Factors to be considered for loss relief (succession)
Current year
Prior year (and two preceding years in the case of commencement losses)
Expectations of future trading profits.
How is a terminal loss relieved?
On a LIFO basis against the trading profits only of the same business for the tax year of cessation and the three tax years preceding that year.
How much personal allowanc can be transferred to a spouse?
10% of his personal allowance
When profits are withdrawn as dividends (NICs)?
There is no class 1 NIC
When is there no corporation tax liability for a new company?
If profits are entirely withdrawn as director’s renumeration
Another way to calculate employer’s Class 1 NIC?
Taxable total profits - director’s renumeration
Interest relief in FHL vs not FHL?
Not FHL: Is a tax reducer
FHL: Is allowable
Factors that affect choice of loss relief (timing of relief)
Claim against general income/capital gains in current or preceding years in earlier relief than a carry forward claim against future trading profits
Does job-related accomodation have a taxable benefit?
NO
How to calculate maximum contribution that qualifies for tax relief?
Trading profit - pension contribution
What is iXBRL used for?
The standard way that accounts and computations are electronically tagged
When is iXBRL mandatory?
Submissions accompanying the online filing of form CT600 by companies
What does form P11D contain?
Expenses and benefits provided
Is form P60 and P11D provided to employees?
YES
How is child benefit income tax charge collected?
Through self-assessment system
If a person makes lifetime gifts even when such gifts are made within seven years of death. Advantage (taper relief)
Taper relief will reduce the amount of IHT payable after 3 years
If a person makes lifetime gifts even when such gifts are made within seven years of death. Advantage (fixed)
Value of PETs and CLTs are fixed at the time they are made
When is iXBRL mandatory?
For submissions accompanying the online filing of form CT600 by companies
Maximum contribution which qualifies for tax relief in pensions calculation?
Relevant earnings - contributions already made
What is an example of a no gain/no loss disposal?
DIsposal of a chargeable asset between a husband and wife
