Exam revision Flashcards
Are salaries for directors in a partnership business allowable expenses?
No, they are recognised as drawings
are motor expenses to be split if the vehicle is used by a director?
No, all the expenses are allowable even if some of it is for private usage
How is a sole trader’s last tax liability calculated?
previous tax year liability + period between 6 April and cessation date
Is the super deduction eligible for second-hand assets?
No, only new
What other allowance type has the same type of qualifying assets as super deduction?
main pool WDA and AIA
Does a car have private use for capital allowances?
Only if it is under a partnership/sole trader business. If it is a company, there is no consideration for the car’s private use in claiming capital allowances and the full 100% can be claimed
Does a car have private use for being business deductible expense?
only for sole traders and partnerships.
Companies do not have the concept of a car being privately used. It belongs to the company
can a business claim AIA, WDA or SDA during a cessation period?
No, only balancing charges can be claimed because all the fixed assets are being disposed of technically
will AAT try to trick you to believe there is private use of a car in a company?
Yes
what do you do with a balancing charge after it has been calculated?
you deduct it from the capital allowances applied?
In other words, it increases tax payable because it reduces capital allowances applied
what happens to the capital allowance table in a period of cessation?
Every remaining asset is written off and disposed of, with the balancing charges or balancing amounts creating one final capital allowance figure.
remember, FYA, AIA, WDA and SDA cannot be calculated during a cessation period
Should you notify HMRC if a client is committing fraud or tax evasion?
No, that would cause a breach in confidentiality.
Who should you notify if a client is committing fraud or tax evasion?
NCA or MLRO
what are the steps if a client is committing fraud or tax evasion?
- Clarify that the client is aware of what they’re doing
- Inform them to correct it
- If they do not, inform them of the consequences (resign)
- Resign
- Cease to act with HMRC
- Notify NCA or MLRO
- Notify any future accountants that there is an issue without mentioning any specifics
is a director an employee for tax purposes?
Yes, a director is under the category of employee
