M XI Flashcards
A sole trader has incurred the following expenses:
• Motor expenses costing £450 for her car that she uses 70% for business
- £4,000 electricity and gas used by the business
- Legal fees of £850 in respect of the acquisition of the business premises
• £1,500 for the acquisition of a laptop to be used within the business
What amount can be deducted when calculating the sole trader’s tax adjusted trading profits?
£5,815
£4,315
£4,450
£5,165
£5,300
B) £4,315. Only the business proportion of revenue expenses are allowable, so only 70% of the motor expenses can be deducted. The electricity and gas expense is wholly related to the running of the business and, therefore, deductible in full. Whereas the legal fees for the acquisition of the premises and the cost of the laptop are one off capital expenses and, therefore, are not deductible. (£450 x 70%) + £4,000 = £4,315.
During the 20/21 financial year, a UK technology start-up company had revenues of £800,000.
Salaries and wages added up to £300,000. Interest on business loans was a further £10,000. The company also purchased some IT equipment for £100,000. The annual investment allowance for 2021 is £200,000.
What is the company’s taxable profit?
£690,000
£472,000
£800,000
£390,000
£790,000
(D) As a general rule, all costs are allowed to reduce corporate income unless an exception applies. No exception applies to salaries and wages or interest on a business loan. Therefore, the £300,000 in salaries and wages is fully deductible, as is the £10,000 in business interest. Generally, business plant and machinery costs are deductible at the rate of 8% or 18% per year. However, the £200,000 annual investment allowance may be taken to offset the cost of qualifying assets (that is, long-term assets used by the company to provide a good or service, such as the £100,000 IT equipment here). Thus, the full £100,000 purchase price of the equipment is deductible and not just £18,000. (A) is incorrect because the wages and salaries expense are fully deductible too. (B) is incorrect because it allows for a deduction of only 18% of the IT equipment. (C) is incorrect because it does not allow for any deduction. (E) is incorrect because it allows for the deduction of the interest only.
A company has a corporation tax liability of £45,000 for the year ended 31 March 2021.
When is the corporation tax due for the year ended 31 March 2021?
By 31 January 2022
By 1 January 2022
By 31 March 2022
By 31 March 2021
By 31 December 2021
B) By 1 January 2022. Companies which are not large (generally, companies with profits of less than £1.5 million) must pay their corporation tax 9 months and 1 day from the end of the accounting period.
A VAT-registered engineer agreed to do some work for a client on a flat fee scheme. The client paid the engineer the orally agreed amount on 10 April, and the engineer sent an invoice to the client on 15 April.
The engineer commenced working on 1 June and concluded his work on 31 August.
What is the tax point for VAT purposes?
10 April
15 April
1 June
31 August
1 September
(A) 10 April. In cases where the payment is made and the invoice is issued before the good or service is supplied, the tax point is the earlier of the payment or invoice date which, here, is 10 April.
On 1 January 2021, a store owner purchased a new commercial building for £500,000 plus £100,000 VAT. The stamp duty land tax for commercial buildings at the time was as follows:
- 0% up to £150,000
- 2% of amounts £150,001 - £250,000
- 5% of amounts over £250,000
What is the stamp duty land tax payable by the store owner?
£15,000
£20,000
£14,500
£19,500
£25,000
(D) £19,500. SDLT on a new commercial building is payable on the VAT inclusive price at the non-residential rates. Thus, the tax will be based on £600,000. Under the rates given, nothing is owed for the first £150,000, £2,000 is owed on the next £100,000 (2% of amount between £150,000 - £250,000) and £17,500 would be owed on the £350,000 purchase price above £250,000 (£350,000 x 5% = £17,500). £2,000 + £17,500 = £19,500
A store owner is granted a 40-year lease on a shop on 1st January 2020. The premium payable is £55,000 and the net present value of the rent payable is £175,000. Annual rents under the lease are £6,000 per annum (a total of £240,000).
On what amount will the stamp duty land tax be calculated?
£0, as stamp duty land tax is not owed on leases.
£55,000, as stamp duty land tax will be calculated based only on the premium paid.
£175,000, as stamp duty land tax will be calculated based only on the present value of the lease payments.
£240,000, as stamp duty land tax will be calculated based only on the actual value of the rent to be paid.
£230,000, as the stamp duty land tax will be calculated based only on both the premium paid and the present value of the lease payments.
(E) £230,000, as the stamp duty land tax will be calculated based only on both the premium paid and the present value of the lease payments. It follows that the other choices are incorrect.
A landlord acquired a residential investment property for £350,000 on 1 September 2020 to add to her existing portfolio of residential properties. The stamp duty land tax for residential property at the time was as follows:
- 0% up to £125,000
- 2% for amounts £125,001 - £250,000
- 5% for amounts over £250,000 but not more than £925,000
A 3% premium is owed on additional residential properties.
How much stamp duty land tax will the landlord owe on the purchase?
£18,000
£17,500
£18,500
£14,500
£15,000
(A) £18,000. An additional 3% is charged in each band due to this being an additional purchase of residential property. Residential properties are exempt from VAT, so we need not worry about calculating VAT. Thus, the landlord must pay 3% on the first £125,000 (£3,750), 5% on the next £125,000 (£6,250), and 8% on the amount over £250,000 (£350,000 - £250,000 = £100,000; £100,000 x 8% = £8,000). So, £3,750 + £6,250 + £8,000 = £18,000.
A large UK-based textile producer has bought some denim fabric from a supplier, paying £1,200,000, which included £200,000 VAT. Half of the denim was used to produce blue jeans for adults and the other half was used to produce denim jackets for toddlers, which are zero rated for VAT. The denim jackets were sold for £4.8 million, and the blue jeans were sold for £3.6 million.
How much VAT must the textile producer pay the HMRC?
£400,000
£800,000
£1,400,000
£1,200,000
£600,000
(A) The textile manufacturer would have to pay £400,000. Because children’s clothes are zero-rated for VAT, the seller can still recover VAT paid for inputs, such as money paid for the fabric, even though no VAT has been charged on the sale. The sale of adult blue jeans would include VAT of £600,000 (£3 million plus 20% equals £3.6 million). The VAT charged of £600,000 can then be offset by the VAT paid for the fabric, which was £200,000. Therefore, the net amount to pay HMRC is £400,000.
A young man regularly carried a lot of cash with him after payday. His friend was worried that someday the young man might be robbed. To teach the young man to be more careful, and intending to frighten him, the friend jumped out from behind a bush wearing a mask and brandishing a cricket bat, saying “Give me your money!”. The friend did not intend to use the bat as a part of his performance; he intended only to show it to scare the young man. The young man was so frightened, he fell over, knocking his head on the pavement and fracturing his skull.
Which of the following is the most serious crime for which the friend could be convicted?
Robbery.
Theft.
Common assault.
Wounding or causing grievous bodily harm without intent.
Wounding or causing grievous bodily harm with intent.
(D) The most serious crime for which the friend could be convicted is wounding or causing grievous bodily harm without intent. This crime requires causing grievous bodily harm with intention or recklessness regarding some harm. Here, the friend’s actions caused the young man to fracture his skull. The friend did not intend for the young man to hit his head. However, the test for recklessness is whether the defendant foresaw the risk of causing some harm and whether, in the circumstances known to the defendant, it was an unreasonable risk to take. Here, the friend must have foreseen the risk of causing some harm by jumping out brandishing a cricket bat, and it would certainly be an unreasonable risk to take. (A) and (B) are incorrect because the friend did not commit the required physical act or have the requisite intent for robbery or theft. For a person to be guilty of either of these two offences, he must dishonestly take a person’s property and intend to deprive the person of the property permanently. Neither requirement was satisfied here. The friend’s actions do constitute common assault, but wounding or causing grievous bodily harm is a more serious offence and so is a better choice than (C). (E) is incorrect because wounding or causing grievous bodily harm with intent requires intent to cause grievous bodily harm, and the friend had no such intent.
A mother decides to go to a local supermarket to steal a tin of beans for her hungry children. She leaves the house with no money, takes a basket, goes to the supermarket aisle, picks up the tin of beans, and places the tin in the basket. She then moves the tin from her basket to her coat pocket. She then drops the basket and walks past the till, making no attempt to pay. She is then stopped by the security guard outside the store.
At what point has the mother committed the offence of theft?
When she left her house without any money.
When she went into the shop.
When she picked up the tin of beans.
When she moved the beans from the basket to her coat pocket.
When she walked past the till.
(C) The mother committed a theft when she picked up the tin of beans. Theft requires the appropriation (taking) of another’s property with the intent to deprive them of it dishonestly. When the mother picked up the tin of beans with the intent to take them without paying, the required act and the required mental state coincided and the crime was committed. The fact that the woman had not yet walked past the till is immaterial. (A) and (B) are incorrect because at that point, the woman had not appropriated the tin. (D) and (E) are incorrect because at that point, the woman had already appropriated the item. It may seem counterintuitive because it would be almost impossible for the security guard to know at the time the woman took the tin that she intended to steal the beans. Nevertheless, in law she has committed theft at that moment.
The local supermarket is very busy and baskets are in short supply. A man spots an abandoned basket at the end of the fruit aisle and goes to pick it up. A woman rushes over to him and shouts aggressively, “If you take that basket, I’ll hit you”. The man is not afraid and says, “Hit me if you dare” and takes the basket. The woman walks off, defeated.
Is the woman guilty of assault?
No, because there was no application of unlawful force.
No, because the man was not afraid.
No, because the threat was conditional.
Yes, because the woman caused the apprehension of immediate, unlawful force.
No, because the assault was only an attempt as the man still got the basket.
(D) The woman is guilty of assault. Assault requires the defendant to intentionally or recklessly cause the apprehension of immediate, unlawful violence. Here, it is the woman’s intention for the man to believe she will apply unlawful force upon him, so the requirements are all satisfied. (B) is incorrect as apprehension does not mean fear-it simply means belief that unlawful force will be applied. (C) is incorrect as conditional threats are sufficient for assault. (E) is incorrect as assault requires no outcome aside from apprehension of immediate, unlawful violence.
A man broke into a home with an intent to steal the owner’s jewellery.
Which of the following items, were they to be in the possession of the man, would not result in the man being charged with an aggravated burglary instead of simple burglary?
A water pistol that looks like a real gun.
A baseball bat with nails sticking out.
Sleeping tablets to drug the owner of the building.
A firework that he planned to light to scare anyone who tried to stop him.
A rifle that is taken from a locker inside the home.
(E) A defendant is guilty of aggravated burglary if he commits any burglary and at the time has with him any weapon, imitation firearm, or explosive. An offender must have the weapon when he enters the building; it cannot be something he picks up whilst inside. While a rifle is a weapon, the man picked it up inside the building. Choices (A) through (D) are incorrect because they are among the prohibited items that would lead to an aggravated burglary charge.
A man was stopped by police in his neighbour’s garden shed, rummaging through the boxes inside. The man was arrested before he had taken anything.
What is the most serious offence with which the man is most likely to be charged?
Burglary.
Attempted burglary.
Theft.
Attempted theft.
Robbery.
(A) The man is most likely to be charged with burglary. Burglary can be committed at the point of entry. A defendant commits burglary when they enter a building or part of a building as a trespasser with the intention to commit theft, grievous bodily harm, or criminal damage and while knowing that they are a trespasser. Here, it seems likely that the man entered the shed as a trespasser with the intent to commit theft. (B) is incorrect as the burglary was completed at the point of arrest. The defendant does not have to actually steal; he just needs to have the intent. (C) is incorrect. Theft is the dishonest appropriation of property belonging to another, with intention to permanently deprive the other of it. The man was rummaging through boxes when he was arrested, so the theft had not yet been completed. (D) is incorrect as, whilst the elements of attempted theft are likely made out, it does not fully reflect the man’s criminality and so is not the best charge. (E) is incorrect as robbery requires the use or threat of force, which is not the case here.
A worker is in a café during his lunch break. He drops a coin between the cushions of the armchair on which he is sitting and reaches in to retrieve it. As well as finding the coin he dropped, he finds a watch that is not his. The worker looks at the watch carefully and puts it in his pocket, intending to keep it.
In which of the following situations would the worker be guilty of theft?
The worker believes the watch belongs to his friend, and he incorrectly believes the friend would consent to him keeping the watch.
The worker mistakenly believes the watch to be his own watch that he lost the previous week.
The worker believes the owner could not be discovered by taking reasonable steps, and he intends to take it to the police station.
The worker believes the owner could not be discovered by taking reasonable steps, but he does not intend to take it to the police station.
The worker is willing to pay for the watch.
(E) The worker would be guilty of theft even if he is willing to pay for the watch. The definition of theft is the appropriation of property belonging to another with intention to permanently deprive. In this scenario, all of the elements are made out with the exception of dishonesty. However, the statutory description of dishonesty specifically states that an appropriation of property belonging to another may be dishonest notwithstanding that the person may be willing to pay for the item; therefore, (E) is the correct answer. The statute also sets out three situations where a person will not be deemed to be dishonest. A person is deemed not to be dishonest when they believe: (1) they have a right in law to the property, (2) they would have the owner’s consent, or (3) the owner could not be discovered by taking reasonable steps. It does not matter if the person is mistaken in their belief. (A) is incorrect because the worker is not dishonest if he believes the owner of the watch, his friend, would consent. (B) is incorrect because the worker is not dishonest if he believes he owns the watch. (C) and (D) are incorrect because the worker is not dishonest if he believes the owner could not be discovered by taking reasonable steps. It does not matter whether he intends to take the property to the police.
A woman is accused of killing her husband and charged with murder. The woman has a number of potential defences.
If all the following defences are available to the woman, which would be the best one for her to put forward to the court?
Self-defence.
Loss of control.
Diminished responsibility.
Any of the above.
None, because they are not defences to murder.
(A) Self-defence is the best defence, as it is a complete defence and would result in acquittal. All three defences are potential defences to murder, so (E) is not correct. (B) and (C) are only partial defences to murder and would result in the woman being convicted of manslaughter and facing a substantial custodial sentence. (D) is incorrect as self-defence would allow the woman to be completely exonerated of the offence.
A boy and a girl wanted to play a trick on their teacher. Without the girl’s knowledge, the boy bought a rubber snake, which he then gave to the girl, hoping she would put it in the teacher’s drawer. The girl duly did so. After opening her desk, the teacher saw the snake and fell off her chair, breaking her hip.
How best could the prosecution bring a charge against the boy for wounding or causing grievous bodily harm without intent?
By supplying the snake, the boy is vicariously responsible for the offence.
The boy cannot be charged with any offence as he did not put the snake in the drawer.
The boy should be charged as encouraging or assisting the girl.
The boy should be charged as a principal, as he was reckless.
The boy should be charged with attempting to commit grievous bodily harm.
(C) The boy should be charged with encouraging or assisting, as this crime requires only that the boy assist in doing an act which would amount to the commission of a crime. The assistance need only be in the conduct (that is, placing a rubber snake in the teacher’s drawer) and not the result (that is, that the teacher’s hip be broken). (A) is incorrect because there is no doctrine of vicarious liability in criminal law. (B) is incorrect because the boy can be charged as a party to the offence, if not the principal. (D) is incorrect. A principal is one who commits the act and has the required mental state at the time. It is doubtful the boy’s action of giving the girl a rubber snake is enough to be guilty as a co-principal. (E) is incorrect because attempt requires specific intent. To be guilty of attempt it must be shown that the boy intended to cause the teacher grievous bodily harm, and there is nothing in the facts that shows this; the facts merely indicate that the boy wanted to play a trick on his teacher.
An 11-year-old boy is playing with some matches in the local park. The boy strikes a match, drops it in the bin, and then watches it smoulder. Believing it will go out and not foreseeing the risk of fire, the boy leaves the park and goes home. The smouldering match sets fire to the bin, which spreads to neighbouring plants, fencing, and the park ranger’s lodge, causing significant damage.
Is the boy guilty of arson for the damage caused to the park ranger’s lodge?
Yes, as the boy recklessly caused damage by fire to property belonging to another.
No, as the boy is under the age of criminal responsibility.
Yes, as a reasonable person would have foreseen the risk of damage to property, and it was an unreasonable risk to take in the circumstances known to the boy.
No, as the boy did not foresee the risk of damage to property.
No, as the boy did not set fire to the park ranger’s lodge.
(D) The boy is not guilty of arson. Arson is criminal damage by fire. A person commits criminal damage by destroying or damaging property belonging to another, intending to do so or being reckless as to whether the property is damaged. The test for recklessness is largely subjective: Did the defendant foresee the risk of the harm occurring, and, in the circumstances known to the defendant, was it an unreasonable risk to take? Here, the boy did not foresee the risk of the harm occurring, so he was not reckless. There is also no intention of damaging the park ranger’s lodge by fire, so there is no mens rea for the offence. (A) is, therefore, incorrect. (B) is incorrect as the age of criminal responsibility is 10. (C) is incorrect, as the test for recklessness is not objective. (E) is incorrect, as the fire the boy started spread to the lodge, and so the actus reus is satisfied.
A man and his wife are arguing over whose turn it is to fill their car with petrol. In a fit of rage, the man picks up a cricket bat and smashes it into the side of the car, creating a large dent. The car is co-owned by the man and his wife.
Can the man be charged with criminal damage to property?
No, because the actus reus requirement cannot be satisfied under the circumstances.
Yes, but only because the man’s actions were intentional.
No, because the man acted in a fit of rage.
Yes, because the wife is a co-owner of the car.
No, because the mens rea requirement was not satisfied.
(D) The man can be prosecuted because the car is owned by his wife as well as by him. Criminal damage to property arises when a person destroys or damages property belonging to another, either intentionally or recklessly. The crime can arise by damaging property co-owned with another. (A) is incorrect because actus reus means the physical act, and here, as explained, the required physical act-damage to the property of another-is present. (B) is incorrect because the crime can be committed through reckless conduct as well as through intentional conduct. (C) is incorrect because a fit of rage is not a defence to a charge of criminal damages. (E) is incorrect because mens rea means the mental state required, and here, the mental state required is intentional or reckless damage to property belonging to another. It was satisfied because the man appears to have acted intentionally-he picked up the bat and hit the car with it.
The manager of a residential care home for people with extreme learning difficulties withdrew £3,000 from a resident’s account to pay off the manager’s personal credit card debt.
Which of the following would be the most appropriate offence with which to charge the manager?
Fraud by false representation.
Fraud by failure to disclose information.
Fraud by abuse of position.
Burglary.
Theft.
(C) The manager should be charged with fraud by abuse of position. A defendant commits fraud by abuse of position when she abuses her position in which she is expected to safeguard the financial interests of another. Here, the manager was in a position where she was expected to safeguard the bank accounts of residents. She abused that position by using a resident’s funds to pay off her own debts. (A) is incorrect because fraud by false representation requires a false representation, and nothing in the facts indicates any such representation was made. (B) is likewise incorrect because fraud by failure to disclose requires a failure to disclose information one is under a duty to disclose to make a gain for herself, and here there is no evidence of such a nondisclosure. (D) is incorrect because burglary requires trespass, which is not relevant here. (E) is arguably correct, but not as clearly as (C). Theft requires the taking of another person’s property with an intention to permanently deprive the other of that property. We do not know if the manager intended to return the money (that is, if she was just ‘borrowing’ it from the resident until she could repay it), and so (C) is the better choice.
A partner at a law firm is arrested on suspicion of involvement with a large-scale fraud. It is suspected he and the other partners at the firm have systematically claimed fees for work not completed. The officer in charge of the investigation wishes to prevent the suspect from having legal advice, as they suspect exercise of the right will result in the other partners being alerted to the investigation.
Can the suspect be refused access to legal advice?
No, every person under arrest has the right to receive private legal advice during detention at any time.
No, a legal professional cannot be refused access to legal advice.
Yes, access to legal advice can be delayed for a maximum of 36 hours.
Yes, access to legal advice can be delayed for a maximum of 48 hours.
Yes, access to legal advice can be refused entirely.
(C) Access to legal advice can be delayed for 36 hours. Delay in accessing legal advice is permitted only when: (1) the suspect is arrested on an indictable only or either way offence, (2) a police officer of the rank of superintendent or above has authorised the delay in writing, and (3) the officer has reasonable grounds to believe that exercise of the right will lead to interference with evidence, interference with others, alerting other suspects, or hindering the recovery of property related to the offence. Fraud is an either way offence. The right can be delayed 36 hours at most, and so (C) is the correct answer. (A) is incorrect as access to legal advice can in some circumstances be prevented. (B) is incorrect as there is no special rule for legal professionals. (D) and (E) are incorrect as they do not correctly state to what extent access can be delayed.