Extra Improvementes

Question 1

What is likely to be the issue to consider when asked about the timing of selling a big asset?

Answer 1

Can the CAPITAL GAIN be OFFSET WITH LOSSES

So make sure you look at that bit!!

Question 2

Terminal loss relief: You can carry back 3 years from what date?

Answer 2

The START OF THE ACCOUNTING PERIOD

So if the 12m straddles 2 accounting periods, each bit gets carried back a different length!

Question 3

What to pay attention to when working out a tax refund?

Answer 3

Has to be PAST TAX PAID, anything in the future is not a refund!! (Might have to split the answer out)

Question 4

What tax often goes with CGT?

Answer 4

VAT - check for easy marks!

Question 5

What can you say about a further distribution on liquidation even if don’t know the amount?

When can’t you know the amount?

Answer 5

Shareholders will be able to deduct the amount they paid for their shares as a cost!

You can’t know if you don’t know the realization proceeds of all assets

Question 6

What can’t you do if a loss is covered by the SSE?

Answer 6

Relieve in a group

Question 7

What is likely if there is a liquidation, for an individual?

Answer 7

CAPITAL LOSS

Relieve in current year or carry forward!

Question 8

Liquidation: If an asset is sold pre-liquidation do you still include its proceeds in the final cash distributable?

Answer 8

YES

Then just deduct any div already paid before liquidation to find out final cash for shareholders

AND REMEMBER TO INCLUDE THE PRICE ORIGINALLY PAID FOR THE SHARES

Question 9

Liquidation: What else will increase the cash you can distribute?

Answer 9

TAX REPAYMENT

(Just the repayment, not losses used to save future tax!)

Question 10

Liquidation: What is another difference between an income (pre-liquidator) and capital (post-liquidator) distribution?

Answer 10

With a CAPITAL distribution, you can DEDUCT THE COST of the shares when you bought them

Question 11

2 really basic things not to forget with CGT

Answer 11

1. AE!!
2. Deduct COST!!

Question 12

What if they don;t say where the separate subsidiary will be registered?

Answer 12

Assume O/S, if benefits question. but note that it depends where it’s registered!

Question 13

What other easy point to mention when discussing an overseas subsidiary?

Answer 13

EXTRACTION OF PROFITS

Only taxed in UK when remitted to UK
Likely as dividend
So no more tax
So worldwide tax what is paid o/s

Question 14

Easy point when dealing with any foreign tax comparison

Answer 14

‘subject to any variation for different rules relating to adjusting profits. For the purposes of the calculations it is assumed that taxable profits in Atlantica are calculated in the same way as in the UK.’

Question 15

CT: How do you deal with a long accounting period?

Answer 15

12m period, then another
Profits: Time apportioned
Capital allowances: Actual basis

Question 16

CT: What is the difference between one long period and a 12m period then a short period?

Answer 16

1. Long period: ADD ALL TOGETHER, THEN APPORTION profits (Capital allowances still on actual basis)
2. Short period: Keep profits (and CAs ofc) SEPARATE
3. Different DUE DATES (cashflow!)

Question 17

In terms of recommendations to the company what’s the point of a DOTAS SRN?

Answer 17

HAVE TO INCLUDE SRN ON RETURN
(Or fines, starting at 5k)

Question 18

Ethics: What about if a scheme promoter wants to keep the scheme secret

Answer 18

Can still mention confidentiality :D

Question 19

Need more ethical points about tax scheme?

Answer 19

Check PCRT

Question 20

HMRC tax avoidance warning signs

Answer 20

Too good to be true
Secrecy
DOTAS SRN
Leases