Business Planning Flashcards

Question

What is the maximum tax relief from investment in VCT?

Answer 1

On max investment for £200,000 p/a. More wont get relief. Tax relief of 30% of invested amount up to point that reduces liability to nil.

Answer 2

If shares disposed of within 5 years. Relief brought back into charge in disposal year.

Answer 3

Yes if relate to shares in the £200,000 permitted maximum per year.

Answer 4

Gains exempt, losses not allowable. Doesn't necessarily have to be post 5 year period.

Answer 5

Benefit taxed at value of second hand value to employer. At cost to employer when taxed to director or employee not in excluded employment..

Answer 6

Employees save some net income over 3-5 years. After can be used to buy company shares or taken with a tax free bonus. Enterprise management incentives (EMI) and company share option schemes (CSOS) are just awarded to key employees.

Answer 7

For CSOS and EMI employees must own /lt 30% of company. EMI requires employment for significant period. SAYE is for all employees.

Answer 8

CSOS = 30,000, EMI = 250,000 (total options in issue by company less than 3 mill), SAYE save £10 - £500 per month.

Answer 9

CSOS - exercise 3-10 years from grant and no discount, EMI - exercise within 10 years of grant and discount possible, SAYE maximum 20% discount.

Answer 10

Gross assets /lt £30 mill, trading company, /lt 250 employees at time of grant.

Answer 11

Must be greater than market value at time of grant.

Answer 12

Discount given is taxable as employment income. (Exercise price - market value at grant) or (exercise price - market value at exercise) if lower.

Answer 13

Option price /gt 80% Market value at grant. Even if issued at discount, no tax consequences at exercise.

Answer 14

For CSOS and SAYE, taxed on gain of proceeds less exercise price. For EMI, taxable amount is Proceeds less Exercise price less amount taxable on exercise.

Answer 15

If it is tax advantaged, chargeable gain is proceeds less cost, then you'd deduct yearly allowance 11,100 and charge 28%. If non tax advantaged do proceeds less cost less amount charged in income tax (gain on exercise... This might bring it to 0). But you probs would have paid more in income tax and NIC.

Answer 16

Share incentive plan, free shares or offer for purchase out of earnings, shares held trust, must be available to all employees.

Answer 17

Gift of up to £3,600 pp/pa. max of £1,800 or 10% annual salary as partnership shares - from pre tax remuneration, matching shares 2:1 on partnership shares, dividend shares - dividends employees receive are reinvested.

Answer 18

Based on market value of shares at withdrawal. If 3-5 years then based on MV at grant if this is lower, no taxable benefit of /gt 5 years. If dividend shares then the dividend was originally taxable instead and can be removed from plan after 3 years with no IT or NIC.

Answer 19

Individual and associates can't have /gt 25% of company, shares have value of at least 2000, first 2000 tax free and NIC free, first disposal free of CGT Up to first £50,000 issued, formal agreement.

Answer 20

Tax relief at source through payroll. It also reduces their trading profits.

Answer 21

20%, higher and additional rate taxpayers can increase bands by the gross contribution.

Answer 22

40,000 (30,000 for 2013/14 and before). Excess charged at income tax rates. Allowance can be carried forward on FIFO basis.

Answer 23

Not treated as earnings for NIC purposes.

Answer 24

55. Must be fully vested by 75 for advantages.

Answer 25

25% (max £312,500). Rest taxed at 55%. Or taxed at 25% if excess used to buy pension income or drawdowns.

Answer 26

£1,250,000

Answer 27

Scheme can borrow up to 50% of fund value, can lend 50% to own company and can invest up to 5% in its own shares.

Answer 28

Not in residential property (Unless REIT) or tangible moveable property.

Answer 29

Plan can also borrow up to 50% of own funds, but not able to lend money. Can purchase shares in companies, but not residential properties (unless REIT) or tangible moveable property.

Answer 30

Investing in commercial property that the sponsoring business or scheme owner uses. Business pays tax deductible rent on property, pension scheme doesn't pay income tax or CGT then on receipts, on disposal pension plan not liable for CGT.

Answer 31

If employee in excluded employment then at second hand value. If director or employee not in excluded employment then at cost to employer.

Answer 32

Only on directors and employees not in excluded employment.

Answer 33

Yes on directors and employees not in excluded employment. £3,150 fixed rate and £594 (fuel).

Answer 34

Only if non-job related if director or employee not in excluded employment.

Answer 35

Yes if director and employee (non-excluded), 10% limit if job related.

Answer 36

Yes if director or non-excluded employee.

Answer 37

Not if reasonable, £8,000 limit for removal costs, stamp duty land tax, solicitors fees.

Answer 38

Charged on directors as if higher rate employees. But there is an advantage as employees do not pay NIC contributions on benefits. Company pays Class 1A NIC on the provision of any taxable benefits. (So may be preferable for company to pay more benefits than cash).

Answer 39

On death, injury disability and lump sums to registered pension schemes. Reward for services or payment for loss of office are taxable.

Answer 40

31,785 and 150,000

Answer 41

Employees. On cash earnings and vouchers,

Answer 42

Employers on cash earnings and vouchers before deductions.

Answer 43

Employers on Taxable benefits (13.8%)

Answer 44

Employers on grossed up earnings included in a PAYE settlement agreement, 13.8%.

Answer 45

Self-employed, on taxable trading profit unless below small earnings limit. £5,965. £2.80 p/wk

Answer 46

Self employed if working age at beginning of tax year. Paid on taxable trading profits.

Answer 47

Exempt from income tax, and disposals from NISA exempt from CGT. Limit is £15,420 cash-like products/ stocks. One NISA per person per year.

Answer 48

As the top slice of your income and taxed at highest marginal rate. Termination benefits taxed as "surprise" termination payments.

Answer 49

Will be exempt. Either 3/4 of whole period of service foreign OR period of service /gt 10 years out of last 20. Remaining ex gratia payment after 30,000 deduction can be pro rated for foreign service.

Answer 50

An offer to an employee of a right to buy shares at a future date and predetermined price.

Answer 51

Unlike non-tax advantaged ones, have conditions and more tax benefits.

Answer 52

CSOP (Company share option plans), EMI (Enterprise management incentives), SAYE (Save as you earn), SIP (Share incentive plans - no options but tax efficient way of providing shares).

Answer 53

No tax on the grant, taxed when exercised (bought) as employment income being market value less (cost of shares plus cost paid for options), taxed on sale as proceeds less market value at exercise.

Answer 54

No NIC contributions, All increase in value charged to CGT (lower than income tax), cashflow, no tax payable on exercise, Entrepreneurs relief (ownership from exercise date) - need 5% ownership but after FY 2013 no need and one year rule satisfied to one year since grant.

Answer 55

Can deduct the difference between market value at exercise and exercise paid by employee - this is an allowable deduction from trading profits in the period when the options are exercised. (For approved and unapproved schemes).

Answer 56

Net profit per accounts, plus disallowable expenditure, plus taxable trading income not credited, less income included that is not taxable, less expenditure not charged but allowable, less capital allowances equals Tax adjusted trading profit.

Answer 57

Columns for FYA/AIA, main pool special rate pool, private use assets. Then do a b/f line. An acquisitions section (FYA), A section with Acquisitions and amount of AIA and disposals. Then on the rest do a section with the 18% and 8% WDA.

Answer 58

Spouses and their relatives, Relatives and their spouses. One is a partnership and the other has a right to share.One is a company and the other has control. Both are partnerships and someone has a right to share in both. Both are companies and someone has control in both. Business partners and spouses/ relatives(Relatives = Siblings, lineal ancestors and descendants).

Answer 59

In cessation of trade for a sole trader use closing year rules. Assets deemed sold at market value. Balancing adjustments arise in TWDV calc or can elect to transfer at TWDV if transfer is to a connected person (Succession election).

Answer 60

No balancing adjustment, make election within 2 years of succession date, Often used on incorporation and transfer of business to close relative.

Answer 61

Offset against future trading profits, offset as much as possible, relief automatic, must agree amount of loss within 4 years of end of tax year of loss, carry forward is indefinite. Must be used on profits of the same trade.

Answer 62

Current tax year and/or previous tax year, optional claim (make election within 12 months from 31st Jan after tax year end

Answer 63

No, it's all or nothing, must reduce the net income as far as possible, can't restrict to use PA.

Answer 64

Yes. The greater of £50,000 and 25% of total income of the year in which the loss is being offset. (adjusted total income is total income plus payroll giving donations less grossed up personal pension contribution).

Answer 65

A loss maybe taxable under 2 tax years from the basis period rules. In this situation the loss will be a trade loss for the earlier tax year only. S72 relief.

Answer 66

It's for business in the first 4 years of trade, you can carry loss back to previous 3 years (applies to all 3 years) on a FIFO basis against general income. Claim applies to all 3 years. Choose within 12 months of 31st Jan after tax year of loss. Careful! It also cannot restrict personal allowance. Start with earliest losses, assign them to earliest profits...

Answer 67

It is relief for loss in final 12 months of trading, can be used with s.64, carry back loss against previous 3 years (LIFO), claim within 4 years of last tax year.

Answer 68

Look at the tax years within the last 12 months of trading. Split it up by tax year (so two years). Then when using, divide this loss over the prior 3 years.

Answer 69

No. (also, only against profits of same trade). But you could use s.86 incorporating relief.

Answer 70

Incorporation relief. Offset trading losses b/f from sole trader against income derived from company (salary/dividends) (FIFO). Sole trader must receive 80% of the consideration on incorporation as shares. Loss b/f is set against earned income from company (e.g. salary). then against dividend income from company.

Answer 71

Timing (CY/PY saves tax now, c/f have to wait, future profits uncertain), Amount of tax (Save tax at highest rate, don't waste PA).

Answer 72

Restricted to £25,000 maximum. Remaining losses carried forward under s.83.

Answer 73

s.64 and s.72 loss relief can only be done up to a maximum of their capital contributions to the partnership. Remaining losses can be carried forward under s.83.

Answer 74

£82,000 where this applies, interest in excess of £500 is not deductible, expenditure on capital assets qualifying for P and M allowances (not cars) is deducted on a cash basis.

Answer 75

New low emission cars ( /lt 75g/km CO2), zero emission goods vehicles, energy/ water saving technologies, research and development cap-ex.

Answer 76

Available on all expenditure except cars. From 01/01/2016 200,000. Before it was £500,000.

Answer 77

A chargeable disposal (excludes gift to charity/ death/ to spouse) of a chargeable asset on a chargeable person (resident in UK partner, trustee, individual - not companies, they get corp tax on gains)..

Answer 78

Cash, cars, gilt edged securities, prizes, bettings, ISAs, Wasting chattels, non-wasting chattels bought and sold for under £6,000.

Answer 79

£11,100. But for trustees it is half of this (unless for bare trust or disabled persons trust then full amount).

Answer 80

Split equally between them. Minimum exemption of a tenth of annual exemption amount.

Answer 81

Proceeds less costs of disposal (to get net consideration), less allowable expenditure, less costs of acquisition/ disposal, less incidental costs of acquisition (legal, surveyor) less enhancement expenditure (architect, extension). Equals chargeable gains.

Answer 82

When the sale wasn't at arm's length use the market value, and from April 2015 quoted shares are valued at average of lower and higher price.

Answer 83

Auctioneer's fees, estate agent fees, legal costs.

Answer 84

Purchase price if bought, market value if gifted, probate value if inherited.

Answer 85

Proportion out the original cost of the asset.

Answer 86

No, you must offset losses against gains as much as possible. Excess is carried forward.

Answer 87

Well if it is carried forward then the loss is restricted to not go less than the annual exempt amount.

Answer 88

It is an extension to s.64 (do that first), offset trading losses against capital gains in current tax year and/ or prior tax year. Optional claim made within 12 months from 31st Jan after tax year.

Answer 89

The lower of: The remaining trading loss after s.64 claim and max amount (which is total capital gains for year less total capital losses for year less total capital losses brought forward IN FULL).

Answer 90

No that would be unfair silly billy. They get an exemption each. But no capital gain or loss when transferred between couples.

Answer 91

Nil gain and nil loss. Transferor disposes at acquisition cost. Actual proceeds ignored. Deemed proceeds of transferor are treated as deemed acquisition cost of transferee. (Only apply when spouses cohabiting).

Answer 92

Market value at date of disposal.

Answer 93

Only against disposals to the same person.

Answer 94

Single gains calculation with total proceeds. (Actually the same thing happens when there is a contingency, but if the amount cannot be determined then something else happens).

Answer 95

On first sale the gain is the total value (including approved value of deferred amount) less cost (e.g. of shares). On deferred consideration date gain is the further proceeds less the previously approved value of it.

Answer 96

If falling into individuals unused basic rate band (including if it was extended): 18%, excess of this is 28%. Entrepreneurs relief may reduce rate to 10%. For all trusts (except bare and disabled) rate is 28%.

Answer 97

Available for sole traders/ partners/ companies. Deduct gain arising on disposal of new old asset from acquisition cost of new one. If all gain is deferred like this no tax payable. (deferred gain the arises on disposal of new asset as base cost reduced). Relief must be claimed.

Answer 98

Goodwill (not for companies), land and buildings, fixed plant and machinery. Both old and replacement must have been for trade.

Answer 99

Must replace asset within period 1 year before and 3 years after sale of old asset.

Answer 100

No, all proceeds must be reinvested for full relief. Partial reinvestment means part of gain is chargeable (lower of: proceeds not reinvested and the full gain).

Answer 101

* If: (Gain on sale of old asset) /lt (Proceeds from sale NOT reinvested), no rollover allowed, full gain chargeable this year. Otherwise chargeable gain is non-reinvested amount.

Answer 102

* If no rollover used (because reinvested profits too low) then it is the cost bought at. If there was rollover relief, it's the cost new asset was bought at less the remaining uncharged gain from the rollover relief.

Answer 103

Only the gain relating to the business proportion eligible for relief. Also, relevant replacement cost is only the business proportion.

Answer 104

One with life of 60 years or less.

Answer 105

Disposal of depreciating asset, ten years from acquisition of depreciating asset, date depreciating asset ceases to be used for trade.

Answer 106

As a depreciating asset, always.

Answer 107

Yes if the non-depreciating asset is acquired before the gain becomes chargeable.

Answer 108

For individuals. Allow gains on disposals to be taxed at 10%.

Answer 109

Individual must hold at least 5% shares and also be employee. Can't be a close company?? - Maybe this is the rule that can't be claimed on goodwill if company related to claimant (true). Assets owned for at least 12 months.

Answer 110

If they are used by his personal trading company (associated disposal) - must have been owned for 12 months and, if shares, employment for 12 months (in EMI this is from Grant date).

Answer 111

From 04/12/14 cannot be claimed on goodwill on incorporation to a company related to the claimant (if it is a close company).

Answer 112

Net off gains and losses on sale of business, deduct losses and annual exemption (allocated to non ER items first), tax gain at 10%. For first qualifying net asset gains up to £10 mill lifetime. Relief gains use remaining basic rate band before other gains.

Answer 113

12 months from 31 Jan after tax year of disposal.

Answer 114

If it is let to the company/ partnership at full market rent. (Partial relief if reduced rent).

Answer 115

Allows gain to be deferred until sold by donee (because they had no funds on receipt anyway), available for business assets gifted by individuals.

Answer 116

The gain is calculated using the market value as proceeds. Gain isn't chargeable but deducted from acquisition cost for the donee.

Answer 117

Acquisition cost deemed to be market value. Gain accruing to donor is deducted from the acquisition cost.

Answer 118

Yes, a joint claim made within four years following end of tax year of gift.

Answer 119

Those used in trade of donor or his personal company, unquoted shares/ securities, shares/ securities of donors personal trading company, an asset where there is an immediate IHT (CLT) charge.

Answer 120

No, also to sales at undervalue where there is an element of gift.

Answer 121

Proceeds which exceed original cost of the asset chargeable to CGT at the date of the gift. The gift relief available is reduced by the amount chargeable. (use market value as disposal proceeds).

Answer 122

Work out the Chargeable gain using MV as proceeds. Work out The amount chargeable now (actual proceeds received less base cost). Gift relief is the balancing figure that takes the former to the latter.

Answer 123

Gain eligible for gift relief is: Total gain x (market value of chargeable business assets of company (CBA) / Market value of chargeable assets (CA) ).

Answer 124

Gift relief should be claimed first.

Answer 125

Entrepreneurs relief should not be claimed as no tax will be saved but the gain will count towards the lifetime limit.

Answer 126

Yes, as the shares "sold" but no cash proceeds so gain can be deferred. Takeover and reconstruction relief.

Answer 127

New shares stand in shoes of old shares (taking original cost and acquisition date - use this cost when working out chargeable gain) so old gain realised when new shares sold.

Answer 128

Original cost of old shares needs to be apportioned between the different forms of consideration. New shares take on same apportion cost and date. No gain until new shares sold.

Answer 129

no gain is charged and cash received is deducted from the base cost of the shares. (Otherwise gain on apportioned part of original cost).

Answer 130

Gain based on apportioned part of original cost, gain deferred until QCB disposed of, for individuals disposal of loan stock itself is exempt from CGT.

Answer 131

Treated like normal shares.

Answer 132

Yes - may be beneficial if the individual's old shares would have qualified for ER but any future disposal of the new shares will not.

Answer 133

in respect of the disposal of the shares and defer the gain until the QCB's are disposed of.

Answer 134

An election must be made not to defer the gain on the shares, the gain is then chargeable at the time of the takeover and ER can be claimed.

Answer 135

Either a UK domiciled person on worldwide assets or a Non UK domiciled person on UK assets only.

Answer 136

Transfers to spouses, charities or qualifying political parties.

Answer 137

Transfers to spouses, charities, qualifying political parties, gifts in consideration of marriage, small gifts under £250, normal expenditure from income, annual exemptions of £3000 per year.

Answer 138

25% if the donor pays, 20% if the trustee pays.

Answer 139

When at least 10% of the net chargeable estate on death are left to charity.

Answer 140

Total value of estate after deducting all reliefs and exemptions but before deducting the charitable gift.

Answer 141

Can be transferred proportionally to spouse.

Answer 142

If they were a UK resident for 17 out of the last 20 years or for the 36 months after losing domicile status.

Answer 143

Yes, the first £325,000

Answer 144

Elect to be treated as UK domiciled but this is irrevocable but ceases to have effect if they have been non-UK resident for 4 successive tax years.

Answer 145

Yes. 5% can be deducted relating to additional expenses incurred.

Answer 146

Unincorporated business (sole trader or partnership share), unquoted shares (inc. AIM) or securities, furnished holiday accomodation treated as business with substantial owner involvement. (For all, properties must be held for /gt 2 years).

Answer 147

Quoted shares from controlling trading business holding, LandB and PandM owned by transferor for trading business where transferor is partner or controler.

Answer 148

Not used wholly/ mainly for business purposes for two years prior to transfer nor are required for future use of business (e.g. large cash balances, investments in land/ shares). If you are giving shares and the company has excepted assets pro-rata them out of th evalue.

Answer 149

As long as the transferee still holds the asset and it is a relevant business property.

Answer 150

If reinvested within 3 years - still counts as original property.

Answer 151

Add back the BPR to calculate additional death tax due (but use lifetime tax value (i.e. including BPR) for nil rate band purposes.

Answer 152

Calculated on unreduced value. (also used for accumulation purposes)

Answer 153

Well when he had them they had BPR so no nil rate band used, this can be used on death estate. But when they became quoted the trust now has to use a nil rate band to work out taxable amount.

Answer 154

Vacant property possession (or right to it in next 24 months). Or property let out after Sep 1995. (Occupied by transferor and used for agriculture 2 years before transfer OR owned by transferor for 7 years before transfer and used by someone else for agriculture)

Answer 155

Property let out before Sep 1995 which has more than 24 months to run. (Occupied by transferor and used for agriculture 2 years before transfer OR owned by transferor for 7 years before transfer and used by someone else for agriculture)

Answer 156

Transfers after July '13, the value of the BPR/APR needs to be reduced to the extent of any liability taken out to acquire, maintain or enhance the asset value. BPR then only applies to net value after this deduction.

Answer 157

By PRs on delivery of IHT accounts.

Answer 158

Transferor on the later of: 6 months after end of month of CLT and 30 April following tax year of CLT.

Answer 159

By transferee, 6 months after end of death month.

Answer 160

From 6 months after death month to day before payment.

Answer 161

Lifetime IHT on CLT where transferee pays IHT, Death IHT on CLT and PET where transferee owns property on the death, IHT death estate.

Answer 162

On controlling holdings of quoted companies that get BPR, holdings of unquoted BPR companies, business and partnerships that get BPR, land eligible for APR that isn't reduced in value by APR or BPR.

Answer 163

Holdings of unquoted companies that do not get BPR, businesses that do not get BPR, land that doesn't get APR.

Answer 164

When you give a gift but still get the benefit. I.e. gift of house but still live in it rent free. Transferring shares but still getting share income.

Answer 165

Full consideration paid, Virtual exclusion (use of property /lt 2 weeks p/a when transferee absent or /lt 1 month p/a when present), unforeseen changes in transferor circumstances, the benefit is the care/maintenance of transferor (elderly or infirm).

Answer 166

Treat as normal CLT or PET transfer, if benefit remains at death treat it as part of death estate, if benefit ceases in transferors lifetime treat as PLT/CLT now, (This may give two charges, IHT is higher of two).

Answer 167

One when the gift is treated as PET (find tax on death and on death estate so reduced nil band rate perhaps on death estate), One where gift treated as part of death estate

Answer 168

Beneficiary, within 2 years of death in writing. Must contain the statement that variation is to have effect for IHT purposes. Notify HMRC within 6 months if more IHT payable.

Answer 169

Not unless specifically stated, original beneficiary still treated as making a disposal for CGT purposes.

Answer 170

No, donees receive assets at probate value for CGT purposes.

Answer 171

Relief on qualifying business assets, or any assets which are CLTs for IHT purposes (takes priority over the business relief and still available if ultimately no IHT liability.)

Answer 172

At market value for CGT and at fall of donor's estate in IHT)

Answer 173

Yes in IHT, not in CGT

Answer 174

1/2 up value for CGT. Lower of 1/4 up value and average bargain price for IHT.

Answer 175

For CGT: Gift relief, entrepreneurs relief. for IHT: BPR, APR, Taper relief.

Answer 176

CGT: 10% (ER), 18%, 28%. IHT: 40% for PET on death, 20% and 25% for CLT after nil band.

Answer 177

for CGT annual of £11,100 and for CGT £3,000 each year and small gift/ marriage etc.

Answer 178

Husband and wife - transfer with no gain no loss, Use both AEs, use basic rate bands, use losses. Give away assets standing at a loss (no need to claim gift relief so no reduction in base cost of donee).

Answer 179

Husband and wife have exempt transfers, unused proportions of nil band can be transferred. Give away appreciating assets - gift fixes asset value for future IHT calculations.

Answer 180

Domicile by origin (usually follows father), Domicile of Dependence (up to age of 16), Domicile of choice (after severing previous links).

Answer 181

If you spent less than 46 days here in current tax year. (If you had one of the last 3 years here this is reduced to 16 days). Or: Works an average 35 hr week overseas, no gaps /gt 30 days in overseas work, no more than 30 days in UK work spending less than 91 days in UK.

Answer 182

Any of: has sufficient ties here, 183 days here in tax year, 91 consecutive days (30 in tax yr) only home here, works fulltime here in the year (35hr wk, no period /gt 30 days no work, /gt 75% working days here, multiple days working /gt 3hrs here).

Answer 183

Spouse or child /lt 18yrs who is a UK resident.

Answer 184

accommodation available here for 91 days, spent at least 1 night in it in tax year (at least 16 if it is a close family accommodation).

Answer 185

At least 3 hours per day for at least 40 days in the tax year.

Answer 186

90 days in UK in either of two proceeding tax years.

Answer 187

You need to have been present here more than any other country.

Answer 188

Non resident /lt 16 days /lt 4 /lt 45 days /lt 3 /lt 90 days /lt 2 /lt 120 days /lt 1 /lt 182 days /lt automatic Uk resident.

Answer 189

If the individual satisfies the fulltime work overseas test for part of the year he left and year after tax year of departure then non UK resident from first /gt 3 hour overseas work day. (in. spouse perhaps) (Simplified). Also sometimes when in following tax year non-resident and from this tax year no longer has Uk home.

Answer 190

If wasn't UK resident before but came to take up full time work then from date of commencement. Also if individual acquires UK home in year which becomes his only home.

Answer 191

If UK resident but not UK domiciled and duties performed wholly outside UK then there's a possible remittance.

Answer 192

UK resident but non UK domiciled, possible remittance. (Same for CGT - limited relief for overseas losses)

Answer 193

either the holding is less than 10% or the UK has a double taxation treaty with non-discrimination clause.

Answer 194

Citizens of EA, resident of Isle of Man or Channel islands, Current or former crown servants and widows, left UK for health reasons, resident in territories where UK has double tax agreement clause.

Answer 195

Unremitted foreign income and gains /lt £2,000 OR no UK income or gains (only taxed investment income under £100) with no foreign income gains and resident in UK for under 7 of last 9 yrs or under 18yrs old.

Answer 196

If resident for 7/9 last tax years: £30,000. 12/14: £60,000. 17/20: £90,000.

Answer 197

Yes if Automatic, no if optional claim made.

Answer 198

If taxed here and abroad. Relief given as deduction for lower of UK tax on overseas income and overseas tax suffered.

Answer 199

Yes, from 6 April 2015. (Only gain post this date is taxable - use MV at date as deemed proceeds, if you want to time apportion your gain then election is required).

Answer 200

On ceasing to be UK resident AND was uk resident for 4/7 last tax years AND non-resident for /lt 60 months.

Answer 201

less than 90 days in UK and not greater than 30 UK work days.

Answer 202

Cost of overseas accommodation, return trips home, two return trips per tax year for spouse/ children if overseas /gt 60 days.

Answer 203

Yes, may be completely exempt or proportionally.

Answer 204

Can apply to receive it gross.

Answer 205

If there is tax it is deducted at source.

Answer 206

No - but you may want to claim personal allowance and tax whole income instead.

Answer 207

Remitted funds used to make loans or get shares in unquoted UK resident trading comp, invested within 45 days of being brought in, after investment sold, proceeds removed from UK or reinvested in 45 days, election made, if condition not satisfied investment sold and proceeds removed from UK or reinvested within 90 days.

Answer 208

No, provided the funds are received by 1st anniversary of 5 Jan after tax year of disposal and proceeds taken offshore in 45 days or receipt.

Answer 209

trustees pay life tenant (remainderman on death). Income on trustees taxed 20, 20, 10% in categories. Expenses (e.g. property) deductible apart from those for trust managing. After tax and expenses life tenant paid (with tax credit on tax paid). Trust management expenses deemed paid from dividend income first, then savings, then non-savings.

Answer 210

More flexible than IIP trusts. Trust management expenses are deductible (not like in IPPs), from dividend income, then savings and non-savings. (Gross up these expenses by appropriate gross up rate of category).

Answer 211

Non savings income: 45%, Interest income: 45%, Dividends: 37.5%. (But first £1000 of gross income is at 20, 20, 10 rate).

Answer 212

a 45% credit.

Answer 213

Running total of tax paid less tax credits by beneficiaries: Basic rate band (any tax paid at 20%), Non-savings income (any tax paid at 45%), Interest income (45%), Dividends (27.5%).

Answer 214

Take the b/f balance on pool, add tax for CY using the Tax pool categories, deduct the credit amount paid to beneficiary (45/55).,

Answer 215

Transparent for tax purposes so income assessed on beneficiaries, not trustees.

Answer 216

Relevant property trust. A non-qualifying interest in possession trust set up after 22.03.2006 and all discretionary trusts.

Answer 217

On set up, immediate charge to inheritance tax as chargeable lifetime transfer arises. On pass to beneficiary there's an exit charge. On each 10th anniversary of setting is there is a "principal" or "10 year charge".

Answer 218

To stop avoiders removing assets before 10 year mark principal charge. Calculated just like principle charge but time apportioned be number of years asset held in trust out of 10 years.

Answer 219

Set up before 22/03/06 or on death. Not RPT.

Answer 220

Same as if the transfers involved an individual. So if settlor's spouse was life tenant then no charge, If someone different, PET. Etc. Death estate charged the same.

Answer 221

Life tenant treated as making transfer himself. IHT treatment then depends on the identity of remainderman of trust. It seems like QIIP's work just like normal transfers to people.

Answer 222

Trust is transparent for tax purposes, transfer seen as outright gift by beneficiary. (i.e. PET).

Answer 223

Gain calculated same way as with individuals. Exemption is half of individual amount (£5,550) with exempt amount divided between trusts set up by same settler. (Never lower than 1/10th of exemption amount).

Answer 224

the disposal is exempt for CGT purposes. However if gift relief was originally claimed when asset entered trust, lower of actual gain and deferred gain becomes chargeable. If there is an IHT charge re the settled property, gift relief can be claimed to further defer that gain.

Answer 225

Treated as gift to individual at market value. If trustees dispose of assets this is a disposal by the beneficiary. If trustees pass asset to beneficiary, no CGT consequences.

Answer 226

(Adjusted trading profits less capital allowances) plus (All property income) plus (Interest receivable less interest payable) plus (rare non-exempt dividends received) plus (chargeable gains less capital losses) less (Gift aid donations).

Answer 227

If they are from a UK company or company where we have a double tax treaty. Must also not be part of a tax avoidance scheme.

Answer 228

Received from property controlled by recipient OR relate to non-redeemable ordinary shares OR from portfolio holding of share class concerned (i.e. /lt 10%) OR relate to shares accounted for as liabilities OR relate to transaction not designed to reduce UK tax.

Answer 229

Fewer than 50 employees. Turnover or BS total /lt £8.5 mill.

Answer 230

Taxable trading profits plus franked investment income (exempt dividends x 100/90 received from non associated companies).

Answer 231

20% (remember to consider prior rates if necessary) (21% for FY14)

Answer 232

small rate /lt (lower limit) /lt marginal relief /lt (higher limit) main rate

Answer 233

£1,500,000 and £300,000 (adjusted for number of associated companies and time apportioned for short periods)

Answer 234

(/gt 50%) holding or under common control of third party. (Including joiners/leavers within period, excluding dormant and passive non-trading)

Answer 235

Spouses, parents, grandparents, children, siblings, grandchildren. Their companies are associated to yours.

Answer 236

(Upper limit - augmented profits) x (basic profits / augmented profits) x fraction…. (this is 1/400 for this year). Also multiply by apportioning year amount if necessary.

Answer 237

SME: 130% deduction against trading income. Large: Extra 30% deduction against trading income.

Answer 238

No, only the 100% FYA.

Answer 239

If it is an SME AND company was entitled to the extra RnD deduction this year AND after the deduction there was a trading loss.

Answer 240

Do: (230% of RnD expenses) and (Trading loss less CY claims less loss relief less group relief). The lower bracket is "Surrenderable loss". Tax credit is 14.5% of this.

Answer 241

It is reduced by the loss surrendered to obtain tax credit.

Answer 242

By election from April 2013. For all from April 2016. Only 89% of RnD expenditure is tax deductible. Credit given at rate of 11% of qualifying RnD spend.

Answer 243

Used to settle liabilities of subsequent periods or surrendered to group members.

Answer 244

Only 89% RnD expenditure is tax deductible. Credit given at rate of 11% qualifying RnD spend, used to pay current liability, remaining credit capped at notional amount (x 80%), further capped at PAYE and NIC paid by company. After these caps the remaining credit is repaid to company.

Answer 245

If it is amortised or impaired: do proceeds less carrying amount. If 4% straight line WDA claimed: Proceeds less TWDV.

Answer 246

Defer gain into any qualifying asset. If proceeds fully invested then whole gain. Partially reinvested then chargeable gain is lower of gain and proceeds not reinvested (remaining gain deferred).

Answer 247

When trading profit arises can defer into new IFA with new rules. ROR is proceeds reinvested less original cost.

Answer 248

Excess cost of replacement over cost of original.

Answer 249

At lower of the cost of the shares and the TWDV of the intangible held.

Answer 250

The one being written off over a greater number of years, this gives a smaller reduction in the annual amortisation. The resulting total amortisation will then be as large as possible.

Answer 251

Taxed at lower rate than corporation tax. (Must carry on development, notional return of 10% of costs allocate to patent, By FY17 profits from patents taxed at 10%, FY13 only 60% of profits here got the treatment increasing by 10% each year.

Answer 252

(Profits relevant to patents) x FY% x ((MR-IPR)/MR). FY% is relevant percentage, FY15 is 80%. MR is main corporation tax rate. IPR is reduced corp tax rat of 10%.

Answer 253

A real estate investment trust.

Answer 254

No, provided they pay out /gt 90% of the profits to investors.

Answer 255

As if they held the land or property directly (so dividends taxed as property income, 20%).

Answer 256

A new tax exempt accounting period starts, assets deemed to be sold and required at market value with a miscellaneous income charge, losses from old business and tax exempt new business are ring fenced.

Answer 257

Property authorised investment fund. It invests in property or in shares in REITs.

Answer 258

Exempt from corporation tax, dividends treated as property income.

Answer 259

One with no trading income (will have other sources…)

Answer 260

From property income if relate to property management, from non-trading loan relationship income if they relate to interest income, on the face of the CT comp if they are general.

Answer 261

Yes, to be offset against future income and gains or group relieved in current CAP.

Answer 262

If the selling company has held at least 10% of the disposed company for 12 continuous months in past 2 years and both companies are trading companies (or the investing company was a member of a trading group).

Answer 263

The SSE rules take priority if a disposal would have otherwise taken place. Unless companies in same capital gams group, then nil gain nil loss basis, SSE doesn't apply. Use share for share relief rules instead.

Answer 264

Interest on late paying debtors. (Not bank interest or debenture interest).

Answer 265

Overdraft interest, interest on loans to fund daily operations, interest on loans to buy PM. (Not interest on loans to buy rental property/ shares/ overdue CT).

Answer 266

No (connected meaning "linked by control"). Loan wavers not deductible either. (Regardless of if trade or non-trade)

Answer 267

Yes in taxable trading income/ allowable trading expenses. (Same with other monetary items that are translated at year end).

Answer 268

No, translate at spot rate and leave at spot rate, no retranslation. On disposal, difference treated as capital gain/loss.

Answer 269

Usually retranslated at year-end closing rate. FOREX on restatement of opening net assets at closing rate goes to reserves (not PnL). (no tax)

Answer 270

Using foreign currency loans and derivatives to hedge against foreign exchange risks. (Usually no tax implications until relevant transaction hits income statement).

Answer 271

SSE will similarly exempt any gains or losses on the hedge.

Answer 272

The lessor is taxed on the rental income, capital allowances are available. The lessee has finance costs and depreciation which is allowable as economically equivalent to rent.

Answer 273

The lessor is taxed on the rental income, capital allowances are available. The lessee has rental charges allowed against trading income (done on the accruals basis).

Answer 274

Lease post 01/04/2006 and greater than 5 years. Accounted for as finance lease or PVMLP if greater than 80% of fair value or the term is for more than 65% of the remaining UEL.

Answer 275

Lessor is taxed on rental income. For lessee, finance costs (interest) is allowable, capital allowances can be claimed as an allowable expense, depreciation is disallowed.

Answer 276

Lessor is taxed on rental income less "periodic deduction" (difference between cost of asset and residual value spread over life). For lessee (rents paid less the periodic deduction) is deductible for tax. Lessee can claim capital allowances as an allowable expense.

Answer 277

15% (160 g/km if between April '09 and April '13) (130 g/km if after April '13)

Answer 278

If for trade purposes then it is allowable trading expense, if for non-trade then allowable NTLR expense.

Answer 279

Yep, they aren't tax deductible.

Answer 280

Interest received is Savings income in IT calc. On disposal the gain is exempt from CGT.

Answer 281

Interest is savings income. On disposal gain gets CGT.

Answer 282

Qualifying corporate bond. Non-convertible, normal commercial terms, denominated in sterling.

Answer 283

0% for BRTP, 25% for HRTP and 30.56% for ARTP…. Not sure why this is different numbers… pg. 289 Study manual, 268 workbook.

Answer 284

Carry forward against future trading income from same trade, offset as soon and as much as possible, automatic.

Answer 285

Offset against "total profits" (before qualifying charity donations). CY only or CY then PY. Use as much as possible. You must make a claim for it within 2 years of end of loss making accounting period.

Answer 286

12 months. If more than one accounting period then time apportion profits and use on LIFO basis.

Answer 287

Period extended to 36 months from accounting period with loss to carry back.

Answer 288

Timing: Cy/PY saves now, c.f have to wait, future profits uncertain, corp tax rates have fallen. Amount: Save highest taxed items (now there's a unified corp tax rate tho - but earlier years, different rates), don't waste relief for qualifying donations as this can't be c/f.

Answer 289

If there was a major change in the nature of conduct of your trade within 3 years of a change in ownership (CIO) OR profits were small, but after CIO significant revival.

Answer 290

Change in: Services, customers, assets traded, location (unless to increase efficiency), suppliers, management, staff, manufacturing methods, pricings.

Answer 291

Only can be carried up to change in ownership date. (Also applies to business property losses brought forward).

Answer 292

When the non trading loan relationship receivable is less than payable, net debit.

Answer 293

Against profits of same accounting period. Partial claim ok. Give relief after s45 but before s37.

Answer 294

Set against NTLR profits for 12 months prior. Relief is lower of: (CY deficit reduced by any claim or group relief) AND (NTLR profit in previous 12 months after CY and b/f deductions, S37, CY/PY relied claimed and QCDs.)

Answer 295

Any deficit not used in the current year or previous 12 months or group relief c/f. Set it against non-trading profits. Automatic.

Answer 296

Set against total profits of the current accounting period, group relief available, excess treated as non-trading debit of following accounting period.

Answer 297

Set against total profits in current accounting period, group relief available, excess carried forward against total profits until loss is fully utilised. Automatic.

Answer 298

Set against chargeable gains in the current accounting period. Remaining losses carried forward against first chargeable gains. No group relief available but can be matched against gains in a group.

Answer 299

A company with no trade, no investment business and no UK property business.

Answer 300

Can no longer be carried backwards or forwards through date of ownership change.

Answer 301

Controlled, Mutuality of obligations, Less costs of correcting work, Less financial risk, No need to provide own equipment, low payment protection, low disciplinary rules, work for single party.

Answer 302

Trading income - no deduction for private expenditure. Current year basis assessment.

Answer 303

Those which are wholly, exclusively incurred for the purposes of the employment/ trade.

Answer 304

Class 2 and Class 4.

Answer 305

Income tax, Class 2 and 4 NIC's are done with two payments on account and one balancing payment through self assessment.

Answer 306

Set up as cheaper to be self employed tax wise - but if you were essentially an employee (being contracted) you'd be charged employee taxes anyway. Personal service companies provide services with intermediary company, individual paid by dividend.

Answer 307

If an individual works for a company through a personal services company, but is essentially an employee of the big company. Then all amounts received from client are treated as employment income.

Answer 308

Total amount invoiced to client by PSC, less flat 5% deduction (allowable expenses), less gross salary and employer's NIC paid to individual in year by PSC. Employer/ee NIC then payable with income tax as if salary paid on 5 April.

Answer 309

The final result includes employer NICs so gross it down by 100/113.8.

Answer 310

Supplies services of individual workers to third parties. Worker receives majority of payments made to MSC (more than if employed by company after IT, NIC, PAYE deduction).

Answer 311

Similar to personal companies, but payments chargeable when made (not as if on April 5th) also, less deductions are permitted when calculating deemed employment income.

Answer 312

A company under the control of: 5 or fewer participators (shareholders) OR any number of participators who are directors. (When looking at a participator shareholding, also look at shares of their associates).

Answer 313

A director of a company, shadow director or manager who owns more than 20% of share capital (including associate holdings).

Answer 314

Relatives of participator, business partners, trustees where you are the settler, trustees where you have an interest.

Answer 315

It has at least 35% of shares held by the public. Or it is controlled by a non-close company.

Answer 316

25% of loan, due on same day as corp tax liability 9 months and 1 day after end of accounting period or in instalments.

Answer 317

Pays it back. Or liability discharged if not yet paid.

Answer 318

HMRC repays the s455 tax and any part of a loan written off is a disallowed expense. Participator treated as having received distribution (net dividend) equal to loan written off: BRTP - 0, HRTP 25% further tax payable, ARTP 30.56% further tax payable. Distribution subject to class 1 NICs if the participator is an employee.

Answer 319

9 months and 1 day after end of accounting period. If participator is also employee then a benefit in kind will also be assessed.

Answer 320

If loan made in ordinary course of business , or a loan to director/ employee if /lt 15,000 and full time worker and owns /lt 5% company.

Answer 321

loans made to trustees of settlements where the trustee or beneficiary is the participator or an associate of one. And also to partnerships in which a partner (or associate) is participator.

Answer 322

As a net distribution, cost to company of providing benefit is disallowed.

Answer 323

It is given income tax relief as a deduction from Total income in the income tax computation to give Net Income.

Answer 324

No relief.

Answer 325

Total taxable profits taxed at full rate of corporation tax.

Answer 326

Yes, from 6 April 2015. Only gain arising after 5 April 2015 is taxable. Use MV at 5/04/2015 as deemed proceeds.

Answer 327

75% group. One company is 75% subsidiary of another or both are 75% subsidiaries of third company. (owns 75% capital, or right to 75% distributable profits or net assets on wind up).

Answer 328

Yes. But groups can be created through companies resident anywhere.

Answer 329

Yes if all current and future loss relief options have been exhausted.

Answer 330

No, only current ones.

Answer 331

No, can surrender to group.

Answer 332

CY: trading income loss, non-trading loan relationship deficits, excess qualifying charity donations, excess property loss, excess management expenses. (excess meaning can't be used in current year by surrenderer).

Answer 333

TTP, less CY trading losses, less b/f trading losses, less CY NTLR deficits (claim made), less B/F NTLR deficits.

Answer 334

Profits and losses must be time apportioned.

Answer 335

A and B can swap losses until "Arrangements to sell" come into place. B and C can swap losses from date of purchase.

Answer 336

Offset losses against profits suffering marginal tax at 21.25% (enough to get company to "small" limit), then offset against profits suffering 21% (out of large and marginal bands), then against profits suffering lowest tax rate.

Answer 337

When 20 or fewer UK or overseas companies each own at least 5% and jointly own at least 75% of a UK company. (No member owns /gt 75% individually - this would make a losses group).

Answer 338

In either direction from members to consortium company, but not between consortium members.

Answer 339

(First a current year claim is assumed to be done - e.g. offset NTLR surplus and loss…) The lower of: the members % of the consortium company's loss and the available TTP of member.

Answer 340

The lower of the member's loss and the member's % of consortium company's TTP.

Answer 341

Group relief. So assume maximum group relief is claimed before calculating the loss available for consortium relief.

Answer 342

A consortium member who is also part of a group.

Answer 343

Losses can be passed through the link company. If the link company doesn't have enough TTP another group company can use the consortium loss. Group losses can also be passed to the consortium company.

Answer 344

Where more than one company in group pays it, parents and 51% subsidiaries (and their 51% subs…). Group payments can include those who do not pay by instalments. Can base estimates of payments on group forecasts. Nominated company pays all instalments for group.

Answer 345

One company owns /gt 75% of another or both are under common 75% control of third company. (If indirect holding, needs to be /gt 50%) (Subsidiaries can't be a member of more than one group) (Non-residents can act as links but cannot participate in the gains group)

Answer 346

Chargeable assets are transferred between group companies at NGNL.

Answer 347

Proceeds received are ignored and deemed proceeds are equal to cost plus indexation up to date of transfer.

Answer 348

The recipient company sells the asset outside the group or the recipient company leaves the group within 6 years still owning the asset it received in the NGNL transfer.

Answer 349

Proceeds less cost (original cost plus indexation allowance to the date of transfer) and then less indexation from date of transfer up to date of disposal.

Answer 350

The gain that should have arisen on transfer arises when the company leaves. (Degrouping charge - DGC).

Answer 351

Proceeds (MV at date NGNL transfer) less cost to original holder less Indexation allowance from date of original purchase to NGNL transfer. (On future disposal, base cost is market value on date of original transfer).

Answer 352

Degrouping gain is added to sale proceeds received on disposal of the shares, degrouping loss is added to the allowable cost of the disposal of the shares. (Effectively, if the disposal qualified for SSE, then the DGC would be exempt too, although a degrouping loss would also be exempt).

Answer 353

a DGC may be reallocated in the group in the same way as any other gain or capital loss but cannot be subject to rollover relief claim.

Answer 354

Market value when the NGNL transfer was made, less the original cost, less the indexation factor up to the point of transfer. (This degrouping gain is then added to the share proceeds from sale of the sub). (G will keep the base cost of MV at acquisition of the asset.).

Answer 355

It arises within the company which is leaving the group.

Answer 356

Demergers/ mergers, when a group company ceases to exist, Transferor and transferee company leave group at same time.

Answer 357

Only available for actual and deemed disposals (e.g. DGC). This allows gains and losses to be matched in the same company and ensures any net gain is taxed at the lowest rate possible.

Answer 358

Same as normal rollover relief but in a group. I.e. A can sell a qualifying asset and B can reinvest in one within the 1 yr before 3 yr after time period. A rolls over gain against base cost of B's asset.

Answer 359

Classed as chargeable assets so transferred at NGNL.

Answer 360

Trading assets. Tax neutral (takeover of asset at carrying amount), Transferee takes over transferor's original cost and amortisation and impairments for it. (neutrality cancelled if transferee leaves in 6 years, maybe exempt gain through SSE but can't exempt degrouping charge).

Answer 361

Work out difference between market value and amortised value at time of transfer. This "profit" is charged on acquirer. The acquirer can then offset against this the difference in amortisation for the years he had asset and was still member (his amortisation uses market value at his acquisition).

Answer 362

Pre entry capital losses. Laws to prevent b/f capital losses at time of joining being used within group. Loss can only be used against gains made by that company on assets which it held when it joined the group or subsequently acquired on arms length terms (not from group members).

Answer 363

For A it is a NGNL transfer. For B deemed to have received it as indexed cost and immediately appropriated as trading stock at market value.

Answer 364

Proceeds (MV at NGNL transfer) less indexed cost.

Answer 365

Sales price less cost (MV at NGNL transfer). B can make an election to turn the gain into trading income.

Answer 366

Before transfer, A turns stock into NCA generating income for A: Proceeds (MV) less cost (to A) gives trading income/ loss.

Answer 367

Receives a NCA at NGNL, the base cost being the MV at the date of transfer.

Answer 368

If it is incorporated in the UK or centrally managed and controlled from the UK.

Answer 369

Organisation for Economic Co-operation and Development - a company should be resident where it is effectively managed and controlled.

Answer 370

20% on profits of a UK permanent establishment/ branch and capital gains arising on disposal of assets used in a UK PE. Other UK income of a non-resident is subject to basic rate of income tax.

Answer 371

Permanent establishment. Look at if business is carried through a UK fixed place (office, factory, workshop). A "Taxable presence".

Answer 372

Yes but it is irrevocable and no relief would then be available for losses either. If election made, effective from start of accounting period after the one in which it was made.

Answer 373

Websites aren't physical presence. UK says a server isn't a PE. OECD says a server could be if it taxes orders and arranges transactions.

Answer 374

Similar to ceasing trade. End of chargeable accounting period, balancing adjustments on PnM, Utilisation of trading losses, UK tax on only UK branch, deemed to have disposed of and reacquired all worldwide chargeable assets at MV at migration date, except assets used in UK branch ("exit charge").

Answer 375

If the company is a 75% subsidiary of a UK resident company and both companies make a written election within 2 years of migration.

Answer 376

When it ceases to be 75% of UK company, or parent company ceases to be UK, or assets which gave charge sold in 6 years.

Answer 377

On the UK parent company.

Answer 378

Net Deferred Gain (this is total of all deemed gains and losses compared to MV on leaving) x Gain at migration of the particular asset being sold / Gross gain at migration (this being just the items that made gain, none of the loss ones).

Answer 379

Standard: Tax due in six equal annual instalments commencing 9 months 1 day after migration period. Realisation method: Tax due on earlier of disposal of asset and 10th anniversary of period of migration. (For intangibles and loan relationship, exit charge spread over 10 instalments unless earlier disposal). Can mix methods.

Answer 380

PE is part of UK company, Subsidiary is separate legal entity incorporated overseas.

Answer 381

PE is not associate, the subsidiary is.

Answer 382

Default: In PE, yes, not in subsidiary.

Answer 383

PE taxed as part of trading income but DTR available. (Unless election made to exempt profits from UK CT - which applies to all overseas branches if made). For a subsidiary, not taxable profits in UK. Dividends remitted to the UK are not taxable.

Answer 384

For PE full UK allowances available unless election made to exempt profits from UK CT. For Subsidiary No UK allowances available.

Answer 385

In a PE no Gain or Loss arises, no balancing adjustments in the cap allowances pool. In a subsidiary there is a gain or loss transfer, balancing adjustments arise.

Answer 386

PE: Unrelieved PE losses set against UK controlled trading profits or future PE profits, unless election has been made to exempt PE profits. For subsidiary overseas losses can't be relieved to group, but if 75% resident in EEA then ok to relieve to parent if no other options.

Answer 387

Set up as a PE as this is part of parent so losses can be relieved.

Answer 388

You trade the assets of the PE for an exchange of the new shares.

Answer 389

The PE ceases to trade, balancing adjustments on PandM attract capital allowances. Chargeable gains or losses arise on the chargeable transferred assets (on MV at incorporation).

Answer 390

When your overseas PE becomes a subsidiary, chargeable gains can be deferred if: All trade and assets (no cash) of the foreign PE are transferred to the sub, consideration is wholly or partly from shares, UK company owns at least 25% of the shares, claim for relief is made.

Answer 391

No, only proportion of net gains relating to securities received can be deferred, rest is chargeable (i.e. cash).

Answer 392

The relevant proportion of the remaining net gain deferred becomes chargeable.

Answer 393

Chargeable gain is: Remaining balance on net total gain deferred x gain on asset on incorporation / total gross gain on incorporation (without the losses).

Answer 394

Underlying tax - the rate of overseas incorporation tax applied to overseas company's profits from which foreign dividends are paid.

Answer 395

Also known as border tax. Charged on overseas income as it is remitted back to the UK. Also the overseas tax paid on profits of a UK company's overseas PE.

Answer 396

Double taxation relief: Treaty relief, Unilateral or credit relief, Expense relief.

Answer 397

A joint country agreement that only one country will tax the income.

Answer 398

Calculate amount to be included in CT comp, overseas income included in top half of CT computation gross of WHT. UK taxed as normal (up to FY14 exempt foreign dividends grossed up and included as FII to find rates). DTR calculated on source by source. Lower of Overseas tax suffered and UK corporation tax attributable to overseas income.

Answer 399

Qualifying charitable donations, losses, management expenses. Deductions against total profits first set off against UK income then overseas income (overseas income that suffers the lowest tax rate done first).

Answer 400

Unrelieved foreign tax. When amount of overseas tax exceeds UK tax. Relief dependent on source of income.

Answer 401

Unrelieved foreign tax can be carried back 3 years on a LIFO basis or carried forward indefinitely against UK or PE tax liability.

Answer 402

None, UFT is lost.

Answer 403

Foreign income included in UK corp tax computation NET of overseas tax and taxed at UK rate. Added to UK loss normally if there is any. No relief deducted from UK corp tax liability. Useful method for maximising losses.

Answer 404

Treaty relief if a treaty exists. Then expense relief if losses/ deductions would reduce UK tax liability to nil wasting less losses. Then credit relief.

Answer 405

Available in terms of withholding taxes and provided company controls /gt 10% of foreign company then also underlying taxes. (These give credit for overseas corporation tax which is paid on profits out of which the dividend is funded).

Answer 406

Net dividend received plus WHT plus underlying tax (proportion of the givers tax that relates to the dividend out of total distributable profits). Then you get total taxable profits. Do corp tax, then compare that to the lower of corp tax and overseas tax total and reduce tax liability by that.

Answer 407

It is paid out of profits that were already subject to corporation tax.

Answer 408

It will reduce the value of the company and hence the gain on disposal. If it is paid out of untaxed profits though it may be attempting to avoid tax by reducing value and converting taxable gain into tax free dividend income. (may then give rise to a value shifting adjustment).

Answer 409

No, there is no tax advantage to be gained here.

Answer 410

A pre-sale transaction that reduces the value of the shareholding being disposed of. Can only restrict capital losses, not capital gains. Only the loss on non-discretionary terms is allowed.

Answer 411

A movement of assets around a group at less than market value, or cancellation of intragroup debt, excessive payments for group relief or payments for group services or products not at arms length.

Answer 412

Controlled foreign company, controlling diverting profits out of UK for less tax. New legislation introduced for accounting periods after Jan 2013. Resident outside UK. Either /gt 50% de facto Uk control OR at least 40% controlled by UK resident and at least between 40-55% controlled by non-UK resident.

Answer 413

If the election has been made to exempt them from UK corporation tax then yes.

Answer 414

If there are no CFC exemptions, and the CFC has chargeable profits falling within the "gateway", and a UK company holds at least 25% interest in the CFC.

Answer 415

All 25% or greater UK corporate shareholders pay UK corporation tax rates on their share of CFC profits. ("apportioned profit rule"). Credit can be taken for their share of any foreign tax paid ("creditable tax").

Answer 416

There is an exempt period of 12 months of the company being in control of UK residents. Excluded territory list where tax rates are high. Company has chargeable profits of 50,000 or less or no more than 500,000 with 50,000 is non-trading. Accounting profits are less than 10% of relevant operating expenditure (which excludes amounts to related parties and cost of goods sold unless locally). Or if tax paid overseas is at least 75% of UK corporation tax that would be due here.

Answer 417

Profits attributable to UK activities. Non-trading financing profits. For each one, see if the test applies then see how much profits pass through the gateway.

Answer 418

The CFC has no assets or risks deriving from tax planning schemes, none of the CFC's assets or risks are managed from the UK, the CFC can manage its own business if any UK management of assets/risks were to stop, all of CFC profits consist solely of non-trading or property income.

Answer 419

Assets and risks with significant people functions in the UK, capital investment from the UK, arrangements in lieu of dividends with the UK (e.g. loans) or UK finance leases.

Answer 420

Connected companies and large companies. If companies do transactions at non-market value price to shift profits and losses to pay lower tax. At least one of the companies must be UK.

Answer 421

At least 250 employees or (revenue /gt £40m and total assets /gt £34m). A company is large if it is a member of a group that breaches these limits.

Answer 422

For transactions that should have been charged at arms length, an adjustment then reflects the profit that would have been achieved if it was done at arms length (normally in both companies if UK). There can be an advance pricing agreement with HMRC that says how complex transactions will happen.

Answer 423

Yes if the amount of loan finance provided exceeds what a third party would have been willing to provide. Disallow the difference in the total interest that would have been paid for the year otherwise. (Also applies to third party loans with a guarantee from group member).

Answer 424

Diverted profits tax, targets large multinationals who have avoided UK tax. If applied, charged at 25% on "taxable diverted profits".

Answer 425

Arrangements to avoid a UK PE by sale of goods over £10mil by non UK res-co to UK customers, UK sales are booked in a non UK res co. OR transactions booked by UK res or PE lacking economic substance, diverts profits via recharges to non uk res. (Rules don't apply for SMEs).

Answer 426

Part of the rules about diverted profits tax. Met in part if mismatch or tax avoidance condition true. Mismatch is about arrangement with 2 connected parties, mismatch in the changes of tax liability with insufficient economic substance.

Answer 427

Diverted profits tax. 25% charge is on notional profits, profits that would have been chargeable had the non-UK resident company carried on the trade through a UK PE,

Answer 428

Notify HMRC within 3 months of end of accounting period if you think it may apply. HMRC will determine an estimate. Company has 30 days to make representations. HMRC will issue notice if charge applies. DPT paid within 30 days of charge notice.

Answer 429

Restricts interest UK companies may deduct in calculating UK taxable profits. Deductible interest in UK shouldn't exceed total interest incurred by world group. Applies if at least one member is large and 75% subsidiaries.

Answer 430

Where UK net debt (Sum of net debt of each UK company but companies with net debt less than £3m ignored) is less than 75% of worldwide gross debt. Gross worldwide debt is the debt in consolidated accounts.

Answer 431

The excess of the UK net finance expense over the worldwide gross finance expense. (Companies with net finance expense less than £500,000 ignored). An amount of the finance income will be exempt from tax up to the lower of: The net finance income (amounts below 500,000 ignored) and disallowance made.

Answer 432

Yes but all rules about ignoring 500,000 are disapplied.

Answer 433

A plc company can't. A private company though can buy back as link as it's directors make a declaration of solvency (the extent to which payment exceeds available reserves).

Answer 434

Only if the shares aren't cancelled.

Answer 435

There is a capital part equal to the original price of the subscription, this is treated as proceeds in a gains calculation. And there's an income part this extra is taxed as a dividend.

Answer 436

No. But an individual can plan to fail either route test if the other is more preferable.

Answer 437

Repurchase is to raise cash to pay IHT OR repurchase is to benefit trade (of the unquoted trading company) OR shares are employee shareholder and repurchased after individual ceases to be employee.

Answer 438

Buying out retiring directors, buying out dissident shareholders, shareholder died and beneficiary doesn't want shares, venture capitalist withdrawing investment. Also necessary: Individual must be UK resident, Must have owned shares for 5 years (3 years if inherited), and after buyback shareholder must have no more than 30% of company's shares and no more than 75% of previous holding. Note, 75% of previous % holding once bought back shares are cancelled)

Answer 439

New accounting period begins on the appointment date, future accounting periods end on the normal year end date and when the company ceases to be in administration.

Answer 440

Becomes responsible for the tax obligations of the company. New accounting period starts on appointment ending earlier of 12 months or end of winding up process. Future distributions to shareholders will be capital. If a parent is in liquidation, group relief stops (gains group remains effective until final distribution).

Answer 441

End of accounting period. Balancing adjustments arise on PnM that attracted capital allowances. Trading losses under s45 no longer option. S37 is on CY then 12 back against total income and gains. Group relief current year. Gains/ losses will arise on chargeable assets. Company deregisters for VAT. If it was a close company before, now it is a close investment holding company.

Answer 442

On cessation of trade loss can be carried back against total profits (before QCDs) of the last 36 months rather than just the last 12.

Answer 443

Chargeable accounting period.

Answer 444

You can offset CY trading losses against total income and gains. B/f trading losses can only be offset against future trading profits.

Answer 445

Pre appointment: Net dividend, taxed at 25% and 30.56%. Post appointment: Treated as capital dividend. Calculated gain where proceeds are the distribution.

Answer 446

Dividend would be better if BRTP as 0% effective rate. Capital may be preferable if they have capital losses. Entrepreneurs relief may be available, AE, CGT at 18% 28%.

Answer 447

Dividend is tax free. Capital may be preferable if SSE conditions are met then it is exempt.

Answer 448

No liquidator so distributions can't be taxed as capital. If amount paid to shareholders is less than 25,000 they can elect to receive it as capital OR income. Distribution of undistributable reserves not permitted unless it is a formal liquidation.

Answer 449

Projected trading loss less closure costs less balancing allowance on PM (written down tax value less market value) etc…

Answer 450

If one company has /gt 50% control of another or they are under common control of another individual, company or partnership.

Answer 451

They appoint a representative member who is responsible for accounting for all input and output VAT. They submit a single VAT return for all group members. All VAT group members are jointly liable for VAT payable. Intragroup supplies are outside of scope (no VAT). Partial exemption regarding recovery of input will be calculated using group totals.

Answer 452

Zero rated companies (in a net repayment situation) excluded to retain cash flow advantage of monthly returns. Companies making exempt supplies can be included but this will affect the partial exemption status of the VAT group and may restrict recovery of input VAT.

Answer 453

Sale of bare land, lease of any building, sale of old (/gt 3 yrs) commercial buildings, sale of existing residential buildings.

Answer 454

Construction and sale of new residential buildings.

Answer 455

Construction of commercial buildings, sale of new ( /lt 3yrs) commercial buildings, work on existing residential or commercial buildings.

Answer 456

Opt to tax - an exempt supply is then a taxable supply, this applies to the whole building. Standard rate VAT then charged on any lease (inc premiums) or sale of the building within 20 yrs of the OTT. Input tax relating to the supply can also be recovered.

Answer 457

It is irrevocable for 20 years after a 6 month cooling off period.

Answer 458

Fully taxable trader tenants will be able to recover any VAT charged to them on their rents. But if the tenants are exempt or partially exempt traders then OTT may disadvantage them, they may not be able to recover all the VAT charged to them on their rents.

Answer 459

Output VAT on the standard rated assets?

Answer 460

Transfer of whole business as a going concern, no change in trade, no significant break in trade, transferee becomes VAT registered immediately. (A building generating rental income and capable of independent operation constitutes a "business" too).

Answer 461

They will still be taxable even though part of a TOGC unless the transferee opts to tax such buildings.

Answer 462

Transfer cannot be treated as TOGC. VAT must be charged, Whether buyer can recover VAT depends on his use of the building.

Answer 463

It will constitute as a TOGC. If buyer agrees to opt to tax then no VAT charged (buyer will charge VAT on rent). If buyer doesn't opt to tax then VAT must be charged on sale. Buyer can't recover it from rent and won't charge it either. Stamp duty and land tax payable by buyer also increases.

Answer 464

Businesses that spend large sums on land and buildings or computer stuff that will be used over periods of time to make taxable and exempt supplies. (Note at beginning initial input VAT recovery remains the same - then reviewed over adjustment period).

Answer 465

Land and buildings /gt 250,000. Aircraft and ships, boats, vessels bought after Dec 2010 /gt 50,000. Single computer items costing /gt 50,000. (All net of VAT).

Answer 466

It's the input VAT recoverable when the asset is purchased. If wholly taxable then can recover all input VAT. Wholly exempt then cannot recover. Partly taxable then done proportionally.

Answer 467

An adjustment for use is required each year for a given period: LnB: 10yrs, Vessels and Aircraft: 5yrs. Computer stuff: 5yrs. First interval runs from date of acquisition to end of that VAT return year.

Answer 468

Comparing the proportion of taxable use on the initial recovery to the new proportion of taxable use. Then VAT may be repaid or recovered. Annual adjustment to recover is: (% now less % on initial recovery) x (Total input VAT) / (10 or 5 year period). Initial amount is Input VAT x initial percentage.

Answer 469

Annual adjustment is made as normal in the year of disposal (as if the asset used for full year). Further adjustment made to cover remaining intervals (adjustment for sale) - If it was taxable assume 100% taxable use, if it was exempt assume 0% taxable use.

Answer 470

TYU3 Chapter 18 is a bit weird…

Answer 471

Can only be transferred as a TOGC if the new owner then takes on the remaining period of CGS adjustments and seller has no adjustments for sale.

Answer 472

Can't be a TOGC and the seller must then have an adjustment on sale and the buyer starts CGS scheme adjustments from the beginning.

Answer 473

For the exporter, the transaction is zero rated. The importer accounts for VAT at local rate (and may be able to reclaim this back with a reverse charge).

Answer 474

Charged VAT as normal at exporter's local rate.

Answer 475

Exports are zero rated. An importer accounts for VAT at the local rate as they bring goods into the country.

Answer 476

The place of services is where the supplier's business is situated. So UK supplier will account for UK output of VAT regardless of customer location.

Answer 477

The place of supply is now where the initial customer is situated. So a uk customer will account for UK output VAT under the reverse charge system. If the services are effectively being enjoyed outside of the EU though then the supply is treated as being made in the non-EU state (same in reverse).

Answer 478

Where the customer belongs (regardless of where the supplier is).

Answer 479

When transfers of stock are by a "stock transfer form", paid by person acquiring the shares, only for existing shares, not a new issue. (For paperless transactions apply stamp duty reserve tax).

Answer 480

0.5% x consideration rounded up to nearest £5. No charge if consideration £1,000 or less.

Answer 481

Yes, unless it's redemption of redeemable shares in accordance with terms of issue OR part of a court scheme OR they are immediately cancelled.

Answer 482

No (if the group is a 75% group).

Answer 483

Within 30 days to HMRC. Interest due from end of 30 days to day before duty paid. Rounded down to nearest £5, no charge if less than £25. Penalties if late presentation,

Answer 484

Applicable for paperless share transfer. (Usually via CREST). Instead of stamp duty. 0.5% x consideration. No rounding. None for group transfers)

Answer 485

Stamp duty land tax collected automatically from by stock brokers. If via crest, payable 14 days after trade date. If not via CREST then payable by 7th day of month following month the agreement was made.

Answer 486

Stamp duty land tax, chargeable on land transactions (land purchase, lease premiums, rent payment.

Answer 487

On the VAT inclusive price. Applicable rate x consideration. Rates in Hardmans book.

Answer 488

annual rent exceeds £1,000.

Answer 489

Non-residential, once rate of SDLT determined, rate applied to whole consideration. For residential SDLT is applied at relevant rate for each threshold (slice system) (Non-res used to be like this).

Answer 490

For excess over £125,000 of residential it's 1%. Also 1% for excess over £150,000 of non-residential.

Answer 491

Gifts with non consideration, transfers on divorce, variations of will, between 75% group members (inc. indirectly) but here relief is denied if at transfer there are arrangements for either leaving group (and retrospectively within 3 years leaving group with assets) or no bona fide commercial transfer.

Answer 492

If interest in a single dwelling is sold for more than £500k (prior to 20/03/14: £2m) to a company, a partnership with at least one partner is a company, or a collective investment scheme. But not if acquired by property developer, for developing, but annual tax on enveloped dwellings likely.

Answer 493

Within 30 days and SDLT should be paid on same date. Interest from here until day before paid. Penalties possible.

Answer 494

Yes, charged on company on transfer. Normal rates. If transfer qualifies as a transfer of a going concern for VAT purposes then SDLT will be charged on the actual value of the LnB.

Answer 495

No, unless consideration is paid. And as shares will be cancelled, no SD payable here either.

Answer 496

Annual tax on enveloped dwellings, based on valuation of property on later of: 1/04/12 and date owner acquired interest. Revaluations made each 5 years. Rates in Hardmans. Payable within 30 days of beginning of each chargeable year. (to prevent residentials transferred to companies to avoid SDLT)

Answer 497

When the property is exploited as part of a property rental business, property developers and traders, heritage properties open to public at least 28 days of year, certain farmhouses, properties held for charitable purposes, unoccupied properties with steps taken to sell, demolish or convert.

Answer 498

When owner is subject to ATED and disposal after 6/4/13 for /gt £1m (£2m before, £500k from 1/4/16). Applies even if owner is non-resident. Cost for gains is MV on '13 or actual cost if acquired after. CGT based on 28% with no indexation allowance or annual exemption.

Answer 499

If proceeds marginally greater than £1m then gain capped at 5/3 of (proceeds less £1m). Can make election to base gain on full period ownership and time apportioned instead to take estimate since 6/4/13 MV instead. Alternatively just take gains since 6/4/13. Gains since MV at 6/4/13 x 28%. Even if owner is non-resident company. For proceeds /gt £1m.

Answer 500

Only on gains from enveloped dwellings on the same or future accounting periods. Capital losses on other assets can't be offset against gains on enveloped dwellings.

Answer 501

Technical excellence, Quantification, Focused, Consideration of Alternatives, Evaluation of information, Professional Scepticism, Structure and Logic.

Answer 502

Read requirement, highlight and annotate, plan answer (key issue, ethics, more info needed?), write up with headings (issue, tax principles, evaluation of alternatives if needed, "because"),

Answer 503

Title, Introduction, Discussion of issues, Recommendations, Sign off, Detailed workings and calculations.

Answer 504

No, put these in the appendices and cross reference.

Answer 505

In a report or memo/ briefing notes, not really. In a letter a concluding sentence is appropriate.

Answer 506

If it is a formal letter format then don't - this seems silly. Also in reports and letters try to make it impersonal. Don't write "I".

Answer 507

Taxation of chargeable gains act, capital allowances act, corporation tax act.

Answer 508

When enactment of legislation is delegated to the relevant body (by an enabling act) rather than going through act of parliament.

Answer 509

Statements of practice showing HMRC's interpretation of issues. Extra statutory concessions, Press releases, Revenue and customs briefs, notices, HMRC manuals.

Answer 510

Assessed individually under IT regardless of drawings so no choices in finding most tax efficient.

Answer 511

Normal relief (set against total income then capital gains of CY/PY), Terminal Loss relief (carry back 3 years against profit in LIFO basis), Incorporation loss relief (carry unrelieved losses forward and set against income from the company).

Answer 512

Capital gains tax, deemed acquisition at market value. (also remember SDLT payable even if there's no consideration).

Answer 513

Will pass to business at market value giving the sole trader a profit. Can be elected to pass at higher of cost and actual sale proceeds, shifting where the profit will occur.

Answer 514

Incorporation relief and Gift relief.

Answer 515

Gain on deemed disposal of assets rolled over against acquisition cost of shares in new company, deducted from base cost of shares. Amount of gain that can be deferred is the proportion relating to MV of shares to MV of total consideration. Relief automatic.

Answer 516

Business transferred by individual as a going concern. Transferred to a company. All assets are transferred (except maybe cash) (liabilities not needed). Consideration received includes shares in company. Election can be made for it not to apply.

Answer 517

Take Market value of all assets transferred (net assets), deduct this by the amount of gains rolled over.

Answer 518

Entrepreneurs relief.

Answer 519

Disapply for incorporation relief. (Claim to disapply made after 34 months from end of tax year of incorporation).

Answer 520

Gift goodwill to company - gain arises but is deferred against base cost of goodwill in hands of company using gift relief (I got this from workbook diagram). I think it works just like normal gift relief.

Answer 521

If the individual wants to retain ownership of some assets (like a property). Then you should use gift relief.

Answer 522

Base cost for the company of assets transferred is lower than under incorporation relief. The shares still have a low base cost.

Answer 523

The value of the remaining transferred assets (less gifted goodwill).

Answer 524

Company sells assets to owner creating chargeable gains/ trading profit for corp tax. The owner sells his shares generating gain on disposal and realising any deferred gains if there was Incorporation Relief.

Answer 525

You can elect to transfer assets at TWDV instead of Market value as company and shareholder are connected persons.

Answer 526

Deemed disposal at market value but can elect to transfer at higher of cost or actual sale proceeds if sold to connected person.

Answer 527

Transfer of business as a going concern therefore outside scope of VAT.

Answer 528

Gain on disposal may be subject to CGT, may be substantial if there was Incorporation relief. Proceeds are MV of assets transferred less tax suffered by company on disincorporation. Then gain is Proceeds less cost of shares.

Answer 529

Calculate gains on assets disposed, calculate additional corporation tax due, reduce company net assets by this, use this value as the disposal proceeds for the shares, compare this to the cost of shares - if IR was available then it would have reduced the base cost.

Answer 530

For disinc between 1/4/13 and 31/3/18. Business transferred to individuals who held shares for 12 months. Transferred as going concern. All assets transferred. MV of land and goodwill less than £100,000 (transferred at lower of MV and chargeable gains base cost) New goodwill treated as transferred at lower of TWDV and MV. Joint claim made.

Answer 531

Looks like goodwill treated as transferred at lower of TWDV and MV and assets transferred at lower of base cost and MV. This reduces profits on disposal. Indexation allowance benefit essentially lost.

Answer 532

Cessation rules and relief for overlap profits. Balancing adjustments on plant and machinery. Deregister for VAT. Capital gains and losses on assets disposed of. Staff redundancies. Terminal loss relief.

Answer 533

Loss incurred in last 12 months of trading profit plus overlap profits. Trading loss from date 12m before cessation to next 5 April (if profit its nil) plus trading loss from 6 April to date of cessation (profit = nil) plus overlap profits not yet relieved.

Answer 534

Set against profits of the preceding three tax years on a LIFO basis.

Answer 535

Before selling, take out the profit in the form of a dividend. This lowers net assets, proceeds and as such the gain. Allowed as long as dividends paid out of normal taxed profits (distributable reserves).

Answer 536

No, perhaps taking a capital gain may be better as you can use the annual exemption and perhaps a smaller tax rate.

Answer 537

Probably, the dividends can be tax free. You can only then do this method if the disposal didn't qualify for the substantial shareholding exemption.

Answer 538

Added to the sale proceeds on sale of shares and so becomes responsibility of the selling company.

Answer 539

Losses can only be group relieved from the acquisition date. (Same with capital losses, only post entry capital losses can be relieved).

Answer 540

No, pre-entry gains only relieved against capital losses arising from the same company before it joined the group or on assets held at the time it joined but disposed of subsequently.

Answer 541

Plant and machinery (balancing adjustments), Goodwill acquired post 1/4/02 (trading asset so trading profit/loss), Stock or debtors,

Answer 542

Sale of land and buildings, plant and machinery (unless under exempt chattel rules, no capital losses on assets qualifying for allowance), Goodwill pre 1/4/02 (Chargeable asset so gain/loss), Investments (Gain/loss (unless exempt under SSE).

Answer 543

Business being transferred as a going concern, no significant break in trade, no change in trade, the buyer is VAT registered. Only exception to rule is LnB with option to tax /lt 3 yrs old. In this case VAT charged unless buyer opts to tax.

Answer 544

It is a qualifying asset for deferral of profits on sale of other intangibles (capital), Follow accounting treatment or elect for 4% straight line tax relief unless purchased from a connected individual after 2/12/14 (in terms of trading profits).

Answer 545

In terms of capital: Fixed PnM qualifies for ROR. In terms of trading profits: Capital allowances.

Answer 546

If it is transfer of going concern then no. VAT will be charged on new/old buildings with an option to tax unless purchaser opts to tax.

Answer 547

Assets at NGNL (75% group), TOGC for VAT or within same VAT group, s944 applies. PnM transferred at TWDV automatically so no balancing adjustments. Subject to restrictions, trading losses are transferred with trade and assets.

Answer 548

If transferor company has negative balance sheet after transfer then losses that can be transferred are restricted. Trading losses equal to net deficit must be left behind. If losses are transferred with a trade under s944 they are ring-fenced to assets they move with, only offset with profits from these assets.

Answer 549

No SDLT unless buyer leaves group within 3 years or arrangement already exists for group exit. DGC may arise in future.

Answer 550

This is just from looking at a question, may need to check. Take trading losses and reduce this by relevant liabilities less relevant assets (priced at MV at time of transfer or amount sold for if available). I think it is now basically that the trade losses can be transferred to new company on a hive down (losses transferred can't be more than net liabilities?)

Answer 551

Acquire a subsidiary and transfer trade and assets to parent.

Answer 552

Combines sale of shares and sale of trade and assets within a group to allow the transfer of trading losses and the purchaser to obtain a clean company. (If a company only buys the shares they'd get the trading losses but maybe also contingent liabilities, if they buy trade and assets they wouldn't get contingent liabilities or losses).

Answer 553

B receives shares, base cost of assets transferred is MV. Set up N and use s944 to transfer trade and assets with trade losses to N. Other company C then holds N by itself.

Answer 554

NGNL transfers, No VAT, SDLT on LnB as arrangements exist for N to leave group, PnM transferred at TWDV

Answer 555

C has no VAT on shares, stamp duty at 1/2% on shares. N still has trading losses but subject to s673 change in ownership rules. B won't get SSE on sale of N as it was less than 12 months. But from 19/7/11 as N received trade and assets of another group company, the share disposal would get SSE if the assets held were used in trade 12 months prior. DGC would also be covered by SSE.

Answer 556

A manager buy out, where the managers of the company buy the business. Usually separated from the company via a hive down/ demerger. Financed using external sources.

Answer 557

Employment income consequences - if they paid less than MV for shares then assessable net befit arises as employment income equal to gain. If they are partly paid shares then outstanding amount taxed as a beneficial loan. Close company/Employee controlled status for new company - tax relief on money borrowed to fund the MBO subject to the restriction on income tax reliefs against total income.

Answer 558

No as they are capital.

Answer 559

Whole of business transferred or enough that is capable of operation as a going concern. To be used by transferee in same business.

Answer 560

If the transferor is VAT registered then the transferee is also when the transfer takes place (or becomes VAT registered). No break in trading. No taxable supply and no VAT chargeable.

Answer 561

Yes. Usually this would be exempt but you can opt to tax as standard rated and receiver will also opt to tax.

Answer 562

(Market value of share consideration / MV of total consideration) x total capital gains before relief.

Answer 563

Deemed disposal and acquisition at market value. In your capital allowances table you then deduct the MV value. The negative balancing charge created is then included in allowances, increasing assessable profits.

Answer 564

Transfer isn't for goods or services so no VAT payable as it's a going concern. HMRC notified within 30 days of transfer. Assumed receiver is VAT registered.

Answer 565

No. But perhaps holdover (gift relief) could be obtained, for goodwill for example if the transfer is a gift of a business asset to the company.

Answer 566

No gain on paper for paper exchanges, only the cash. Work out the "cost" of cash by taking the proportional value of cash consideration, and applying this proportion to original cost of shares. Then work out CGT as normal for the cash.

Answer 567

Notional tax payable is 25% of loan amount. Claims for discharge are reducing the amount originally due by the amounts paid up to the due date and taking 25% of this new amount instead.

Answer 568

Treated as a distribution. Participator then taxed on grossed-up distribution. No further tax on starting or basic rate but further tax on higher rate taxpayer.

Answer 569

Work out emission percentage and apply this to car list price. Reduce by participator contributions. This is the taxable distribution but you have to gross it up like a dividend: x 100/90.

Answer 570

1-50: 5%. 51-75: 9%. 76-94: 13%. If above then: 1% for each 5 over 95 added to 14%. For over 210: 37%.

Answer 571

Total earned by company, less 5% deduction, less salary, less employer NIC. The deemed employment income is then 100/113.8 of this, the difference is employer NIC. (13.8%) (This is taxed as income tax on top of the salary given).

Answer 572

As salary (but include NIC, income tax), as Dividend (include notional tax - also only if distributable reserves exist), as pension payment (20% corp tax relief essentially).

Answer 573

I don't think so - looks like this is only sole trader under s.64.

Answer 574

Incorporate, this will reduce income tax (which would have been charged on all profits before drawings are made).

Answer 575

Market value of assets excluding goodwill.

Answer 576

Market value of assets less gains deferred.

Answer 577

Future gains on disposal would be tax free. But it is restrictive and would limit what could be done in the future.

Answer 578

BPR relief on all the related shares, so just get taxed on unrelated portion.

Answer 579

430,000 (MV) less APR (100% APR of agricultural value of 300,000). Leaving 130,000.

Answer 580

Nothing as between them they had ownership for more than 2 years so 100% BPR relief.

Answer 581

Yes for an individual, not for a company - they are already paid gross.

Answer 582

Without the QCD. This goes in "unrelieved donations" underneath.

Answer 583

No, but if you get the shares next year then you can elect to treat any amount of the shares as bought in the previous year anyway, so this kind of has the same effect.

Answer 584

Not £50! It is restricted to £30. Excess tax credit of £20 not recoverable.

Answer 585

Unmarried couple get taxed in the owned percentage proportions. Married get taxed on equal split unless stated otherwise.

Answer 586

Controlled foreign company, not UK company but controlled by more than 50% Uk.

Answer 587

Profits taxed in proportion to UK resident corporate owners. Deduct their relevant proportion of foreign tax already paid.

Answer 588

Company that gained advantage from not at arms length transaction must adjust Corp tax self assessment by replacing arms length price.

Answer 589

Interest deductible in uk cannot exceed worldwide interest expense incurred by group as a whole.

Answer 590

Disallow interest that an Independent party wouldn't have been able to provide.

Answer 591

Not on CSOS, EMI discounts then employment income charge equivalent to discount given at exercise. NIC only arising on this if shares were quoted.

Answer 592

With net assets less than £30m, less than £3m of these options already in place, less than 250 employees.

Answer 593

The restriction to own 5% of the company is relaxed.

Answer 594

25% if annuity purchase or 55% if lump sum. (Pg 90)

Answer 595

For 20 years yes.

Answer 596

What is the annual partial exemption rule, can't find it.... Why isn't first reclaimed 22,000/5 X (60%-63%)?

Answer 597

Multiply your adjustment number by the number of remaining periods.

Answer 598

You have to pay it, VAT is not 20% but 1/6 to make it up to 120% total.

Answer 599

Annual charge on enveloped dwellings, if property worth more than £1m. (Value taken at later of 1 April 2012 and time bought). Owner is company, collective investment scheme, or partnership where one partner is one of the above. (Look up rates in hardmans)

Answer 600

TCGA - taxation of chargeable gains. Loss rated as current year capital loss so can't restrict to preserve annual exempt amount. Amount relievable is lower of unrelieved trading loss after s.64 relief OR current year gains less current year loss less capital losses brought forward. Kind of obvious, unused losses vs available CG.

Answer 601

Cannot be carried back but carried forward and offset against future income and gains of the company

Answer 602

Deficits in NTLR.

Answer 603

(Gain on migration of the single asset / net gain on only gain-makers on migration) x gross gain including loss makers on migration.

Answer 604

The extra over the reasonable interest amount is a disallowance. If the arms length basis is more than the worldwide group finance expense (by £x) then increase disallowance by £x.

Answer 605

By election only 25% can pass through. And no charge if group as a whole has no net UK interest deductions.

Answer 606

Restricted by the EIS relief obtained and not repaid.

Answer 607

The capital allowances for the Market value and the yearly rentals less periodic deduction.

Answer 608

The VAT registered business must recognise income and output VAT.

Answer 609

She will be charged to income tax on £32 and capital gains tax on a gain of £4

Answer 610

Shareholder must have at least 5%

Answer 611

Non resident /lt 16 days /lt Non resident /lt 45 days /lt 4 /lt 90 days /lt 3 /lt 120 days /lt 2 /lt 182 days /lt automatic Uk resident.

Answer 612

Work out the actual gain on disposal. Proportion this into ratio of amount rented out at, and rent discount given. Discounted portion taxed at 10%, rest at 28%.

Answer 613

All or part of trading business the individual has partnership (or sole) in. Assets of the trading business on cessation. Shares under EMI scheme after 5 April 2013. Shares in personal trading company.

Answer 614

For when a partnership business is bought by a company, ability for partner to carry forward losses against income from the company (he's now director). Consideration must be at least 80% shares held throughout tax year of loss relief.

Answer 615

Usually cash taken to provide a gain equal to any annual exempt amount or capital losses. Then it is a tax free amount of proceeds. (Value of cash received / value of total consideration) x net gains = tax free gains.

Answer 616

Entrepreneurs relief is lower tax, you may still get ER after doing incorporation relief but you will have to have owned the shares for at least a year. Otherwise it is normal rates. 34 months from end of tax year to disapply.

Answer 617

The value of consideration that is higher than cost.

Answer 618

10 million

Answer 619

When circumstances of transferor change in a way that was unforeseen at the time of original transfer. Benefit provided by the transferee represents unreasonable care and maintenance of the transferor as elderly or infirm relative.

Answer 620

Because when you are non-UK resident, no CGT.

Answer 621

Sole traders yes, but with companies you can only do either current year, or current year and prior year. Not the prior year alone.

Answer 622

Not after 04/12/14.

Answer 623

Work out the apportioned cost relating to the QCB. Gain on this is deferred. (The disposals of them will be exempt but gain will then be chargeable).

Answer 624

EIS get 30%. SEIS get 50% (of the amount you invested).

Answer 625

If the company hasn't invested 70% of the funds you've given them in the year.

Answer 626

No because then you are connected.

Answer 627

If goodwill created after 2002 then trade profit. If before then capital gain.

Answer 628

Maximum of 6% of value of trust. Every 10 years. 30% of current lifetime tax rate. (So 30% x 20% now). Note - for the current lifetime tax rate, work out the charge incurred as percentage of full trust - so this will be less than 20% if there was a NRB used before charging 20%.

Answer 629

Establish the facts, consider who is involved, consider the 5 ethical issues, investigate internal procedures, document.

Answer 630

Loss relief groups stop on cessation of trade. Gains groups stop on wind up.

Answer 631

No, the costs of cessation shouldn't include liquidator fees if they are paid by shareholders - deducted after. If paid by company then include them in the final costs.

Answer 632

Yes, would be able to claim income tax relief on interest paid on loan to buy shares.

Answer 633

Difference between amount you bought shares for and how much they were originally for.

Answer 634

Original price of building x (capital proceeds from premium / (full premium received + revisionary interest)). Kind of like proportioning the original cost by same premium proportion with revisionary interest thrown in.

Answer 635

Yes if there is no remittance basis change.

Answer 636

Greater income relief (50% over 30%) and CGT exemption of 50% of the investment if reinvestment made rather than deferral as only option for EIS.