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Tax Compliance > Reliefs, charges and exemptions > Flashcards

Reliefs, charges and exemptions Flashcards

1
Q

When does the degrouping charge apply?

A

A company leaves a gains group less than or equal to 6 years of receiving an asset in a no gain, no loss transfer
And
It still owns the asset at the date it leaves the group

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2
Q

How is a degrouping charge applied?

A

The charge is added to the share proceeds

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3
Q

How is the degrouping charge calculated?

A

It is equal to the gain that would have been made if the asset was sold to a third party not transferred within the group

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4
Q

When does the substantial shareholding exemption apply?

A

When there is a disposal of shares, where the seller has more than 10% shares for 12 months of the last 6 years

And the shares are in a trading company, or the holding company of a trading group

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5
Q

What does the substantial shareholding exemption mean for proceeds of shares?

A

They are exempt

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6
Q

What does SSE mean for the degrouping charge?

A

If SSE applies, proceeds are exempt and therefore so is the degrouping charge.

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7
Q

When is roll over relief applicable?

A

When an asset is sold and the proceeds are used to buy an asset 12 months before or 36 months after.

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8
Q

How many gains groups can you be in?

A

1

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9
Q

How many losses groups can you be in?

A

As many as you want.

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10
Q

Who can be in a VAT group?

A

Anyone with more than 50% control. Direct or indirect.

Can extend from an individual, partnership or company

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11
Q

Capital gains for individuals
What is the formula for quoted share valuation?

A

Higher quoted price+lower quoted price
/
2

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12
Q

How much is AEA? When is it used?

A

Individuals capital gains returns
£6000

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13
Q

Can the AEA be carried forward each year?

A

No you get one a year and can only use one a year

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14
Q

When is the basic tax point?

A

When the goods are delivered

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15
Q

When is the basic tax point overridden?

A

The invoice or cash received prior to the goods.

Unless invoice is received within 14 days of the delivery.

Cash takes priority

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16
Q

When working out the VAT recoverable of the overheads in partial exemption do you round up or down?

A

Up

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17
Q

When does rent a room relief apply?

A

When the person lives in their home with someone paying rent

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18
Q

How much is rent a room relief?

A

£7,500
Half where more than one share the home

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19
Q

Does rent a room relief prevent other reliefs?

A

Yes cannot use property allowance on this property

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20
Q

When can you ask to join the pension scheme?

A

Between £6,240 and £10,000

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21
Q

How are occupational scheme pension contributions dealt with?

A

Net pay arrangement so deduct from employment income

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22
Q

How are personal scheme pension contributions dealt with?

A

HMRC pay in an extra 20% so extend the income bands by the grossed up amount

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23
Q

What is the maximum amount of annual tax-relievable pension contributions?

A

Higher of £3600 and (employment income and trading profits)

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24
Q

What does annual allowance do for pension contributions?

A

Caps them at 60k - can be carried forward for three years

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25
Q

What is the tax free amount when drawing a pension?

A

25% of lower of fund and lifetime allowance £1,073,100

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26
Q

How is a specific entertaining allowance taxed?

A

Specific allowance - actual expenses = tax on net amount

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27
Q

How is a round sum allowance taxed?

A

Tax on amount - any expenses that would be allowable

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28
Q

What rate is used for mileage on NIC calcs?

A

45p per mile for all miles

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29
Q

Mileage rate for motorcycle

A

24p

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30
Q

Mileage rate for bicycle

A

20p

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31
Q

How are cash vouchers taxed under employment income?

A

Taxed at the amount that can be claimed

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32
Q

How are credit tokens taxed under employment income?

A

Taxable amount is the cost to the employer

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33
Q

How are vouchers exchangeable for goods and services taxed under employment income?

A

Taxable amount is the cost to the employer less anything paid by the employee

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34
Q

How is non job related accommodation taxed?

A

If owned
Annual value + (Cost - 75k)*2.25% - employee contributions

If rented
Higher of annual value or rent paid
- employee contributions

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35
Q

Living expenses are taxable income but what is job related accomodation

A

Limited to 10% of employees earnings and other non-accommodation benefits

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36
Q

Cars for private use tax

A

List price - capital contribution capped at 5k * CO2% - running cost

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37
Q

What is private fuel benefit?

A

27800 * co2

Do not take into consideration employee contributions

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38
Q

Tax on company vans

A

Taxable benefit = £3,960 or £0 if zero-emission
Additional private fuel benefit = £757

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39
Q

Assets available for private use tax?

A

Taxable benefit = 20% of the market value (MV) when first provided

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40
Q

If the employee subsequently acquires the asset, the additional taxable benefit is the greater of

A
  • Market value at the time of employee acquisition, OR
    – The original market value less the cumulative taxable benefit to date for the employee
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41
Q

Tax on cheap loans for employees

A

Taxable benefit = loan value × 2.25% – actual interest paid

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42
Q

Tax on loan write offs

A

Taxed on amount written off

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43
Q

Salary sacrifice - The taxable value of benefits where cash has been sacrificed is the higher of:

A

– the taxable value (using the benefits code); and
– the value of the cash sacrificed.
The taxable amount is treated as a benefit and subject to Class 1A NICs

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44
Q

When are the badges of trade used?

A

To determine if something is a capital gain or trading income

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45
Q

What are the badges of trade? 9

A

Intention to make a profit
Number of similar transactions
Nature of the asset
Connection with existing trade
Changes to the asset
Reasons for sale
Source of finance
Period of ownership
Method of acquisition

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46
Q

What is the trading allowance?

A

£1000 allowable but then cannot use expenses

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47
Q

Are donations allowable in adjusting profits?

A

No only small donations to local charities and stock/plant gifted to charities/schools

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48
Q

What fines and penalties are allowed?

A

Only parking fines incurred by employees in the course of the business

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49
Q

What legal and professional fees relating to CAPEX are allowable?

A

Legal costs on renewing short leases (<50yrs)
Costs of registering patents / copyright
Incidental costs of raising debt finance

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50
Q

What employment payments are disallowed?

A

Redundancy payments on cessation of trade in excess of 4 x statutory redundancy

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51
Q

What is disallowed for car leasing?

A

Any element relating to private use
15% of the lease cost if over 50kg CO2

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52
Q

The trader is taxed on the —– price of goods taken for own use

A

Selling price

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53
Q

How many years of expenditure can you claim pre commencement of trade?

A

7 years

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54
Q

What are the business use of home expenses?

A

Numbers of hours worked Monthly adjustment
25-50 £10
51-100 £18
101 or more per month £26

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55
Q

How is use of business premises as a home dealt with?

A

Reduce the allowable costs of the business premises by the figures in the following table
Number of occupants Monthly adjustment
1 £350
2 £500
3 or more £650

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56
Q

What is the 6 step process for calculating 23/24 trading income when moving from basis to tax period?

A

Step 1: Calculate the profit/loss of the standard part of the basis period
Step 2: Calculate the profit/loss of the transition part of the basis period
Step 3: Deduct overlap profits from Step 2 (the transition part)
Step 4: Add together the results from Steps 1 and 3
– If Step 3 and/or 4 results in nil, or a loss, this is the total profit/loss for the basis period
– Otherwise continue to Step 5
Step 5: Calculate the total transition profit, which is the lower of:
– The Step 3 amount
– The Step 4 amount
Usually 20% of the total transition profit will be assessable as it is spread equally over five tax years starting with 2023/24 (unless an election is made to accelerate the charge)
Step 6: 2023/24 taxable profit is:
– Step 5, if Step 1 gave nil or a loss
– Step 1 + 5, if Step 1 gave a profit

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57
Q

4 steps to tax transitional profits

A

 Calculate the income tax liability on the individual’s net income excluding the transition profits (Amount A)
 Calculate the income tax liability on their income including the transition profits (Amount B)
 Amount B less Amount A = income tax liability relating to the transition profits (Amount C)
 Total income tax liability = Amount A + Amount C

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58
Q

What is structures and buildings allowance?

A

Relief on commercial buildings and structures built after 29/10/18
Doesn’t include the cost of the land
3% straight line allowance

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59
Q

What goes into the main pool?

A

All machinery, F & F, and equipment
Vans, forklifts, lorries, motorcycles
Cars with emissions between 1-50g/km
2nd hand zero emission cars

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60
Q

What goes into special rate pool?

A

Long life assets (over 25 year useful life and over 100k spend)
Thermal insulation and solar panels
Integral features
Cars with emissions over 50g/km

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61
Q

What is the max AIA and what can it be used on?

A

£1mil
Use on plant and machinery but not cars

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62
Q

What qualifies for FYA?

A

New electric cars
New zero emission goods vehicles
R & D capital expenditure
Electric charge points
P & M to use in a designated enterprise zone

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63
Q

What counts as a small pool?

A

Less than £1000 after transfers but before WDA.
Can be scaled up or down for long or short periods.

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64
Q

How are capital allowances different for sole trade and ltd?

A

Private use is not taken into account in Ltd BUT it is in sole trade (they have there own column and only get business % of allowance.

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65
Q

What is the benefit of depooling a short life asset?

A

Could get a balancing allowance at sale

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66
Q

What do you do if a short life asset is held for more than 8 years?

A

Transfer the remaining amount to the main pool

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67
Q

Pre trading capital expenditure is allowed but…

A

It gets the rate of the allowances at the date of purchase not the date they are included in the trade ie day 1.

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68
Q

What is different for capital allowances on cessation?

A

Any items acquired are added to bf
NO WDA, FYA or AIA
Disposal value of assets is entered and then balancing charges applied
Assets taken by owner are treated at market rate

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69
Q

What happens with the structures and buildings allowance on sale of the asset?

A

Seller
 The seller will time apportion their relief up to the date of disposal  there are no balancing adjustments on disposal.
 The seller will need to increase their proceeds on disposal by the SBA claimed to date for the purposes of calculating the chargeable gain on disposal.
Buyer
 The new owner takes over the remaining allowances over the remainder of 331
/3-year period.
[] Their relief continues to be based on 3% of the original cost of the asset and there is no uplift for any increase in value.

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70
Q

Unincorporated trading loss arising in a tax year may be set against…

A

General income in the same year before personal allowance
General income in prior year before personal allowance
Trading profits in future years
Current year capital gains after general income

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71
Q

What are opening year loss relief?

A

Losses made in the first 4 years of trade can be set against total income in the 3 years prior.
Before personal allowance so all or nothing

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72
Q

Loss relief against trading income reduces

A

Income tax and NI

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73
Q

Loss relief against non-trading income reduces

A

income tax , set against future NIC

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74
Q

How does terminal loss work?

A

Losses in the final tax year can be set against the prior 3 years

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75
Q

Non-active traders restrictions

A

If individual doesn’t spend 10 hours on the trade then loss restricted to £25k per tax year.
Remaining loss is carried forward to use against future profits.

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76
Q

How do you calculate the limit on level of trading losses able to be set against non-trading income?

A

Higher of £50k or 25% of adjusted total income

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77
Q

How to calculated adjusted total income?

A

Income plus Give As You Earn charitable donations, less gross personal pension
contributions

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78
Q

4 steps to allocate the partnership profits

A

1 Adjust profit
2 Deduct capital allowances
3 Allocate the salaries and interest on capital
4 Split the rest between partners and periods if required

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79
Q

When allocating profit in partnerships you must check for?

A

Notional loss/profit that needs reallocating to other partners

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80
Q

Salaried members of an LLP are treated as

A

Employees

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81
Q

Is there restrictions to loss relief in limited liability partnerships?

A

Yes, total lifetime loss relief is restricted to amount of capital invested
Can be used against trade profits

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82
Q

When can a business use cash basis?

A

When: unincorporated business
Receipts are less then £150,000
Must leave if £300k in previous tax year

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83
Q

Differences between cash and accruals basis

A

Capital allowances not a thing
Just tax and expense as the asset is sold/purchased
Goods taken for own use at cost price not sales
Bad debts is not a thing
No restriction on car lease payments
Interest payments are allowed
Ceasing to use an asset is treated as taxable receipt
Ceasing to trade - stock and WIP treated as a taxable receipt

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84
Q

How do you elect to use cash basis?

A

Tick the box on the tax return

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85
Q

Cash basis is default for …Can you elect to use acrruals?

A

Property income for unincorporated property business with cash receipts not exceeding £150,000
You can elect but has to be done every year

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86
Q

When ceasing to use cash basis what do you do with plant and machinery not fully paid for?

A

The remaining amount goes under capital allowances

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87
Q

How does the cash basis effect income tax?

A

No qualifying interest relief on a loan to invest in a partnerships if the partnership is taxed on cash basis

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88
Q

How does the cash basis effect VAT?

A

If trader uses cash basis for income tax they must do the same for VAT

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89
Q

What £ is the AEA and who gets it?

A

6000
Individual people

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90
Q

Capital losses can be used against …

A

Current year losses but lose AEA
Excess carried forward and used after AEA

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91
Q

An individual is connect with their

A

Spouse
Direct relatives and their spouses
Direct relatives of their spouse
Business partners and their spouses/relatives
Companies they control

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92
Q

Disposals made with connected persons are always at ______

A

Market value except souse which is made at NGNL

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93
Q

Losses arising on disposal to a connected personal can only be used against

A

future gains from that person

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94
Q

Share matching rules for individuals

A

Same day
Next 30
Share pool

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95
Q

For capital gains of quoted shares for individual

A

Use middle of quoted prices

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96
Q

When is CGT due?

A

31st Jan after tax year of disposal

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97
Q

Payment by 10 instalments are available for gains on

A

gift of land
shares in a company you control

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98
Q

When is cgt due for disposal of UK residential property?

A

60 days of the disposal

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99
Q

What is private residence relief?

A

Relief on capital gain on individuals home

100
Q

How do you calculate private residence relief?

A

Gain on disposal * (Actual or deemed period of occupation/total ownership)

101
Q

What counts as deemed occupations for private residence relief?

A

Last 9 months - if occupied at some point
Up to 3 years for any reason - if lived before and after
Up to 4 years whilst working elsewhere - if occupied at some point
Any period when working overseas - if occupied at some point
Up to 24 months whilst prevents e.g. being built or altered

102
Q

Deemed occupied rules don’t count when

A

Partly occupied and partly business

103
Q

Letting relief is available for

A

Owner of a property whilst they let out part of the house they live in

104
Q

Letting relief is the lower of

A

£40,000
Gain exempt under PRR
Gain in let period

105
Q

In divorce proceedings if a spouse moves out prior to giving up their interest it is deemed…

A

occupied time

106
Q

Spouses can only have ——- private residence

A

One

107
Q

How long do you have to elect a private residence if you have two homes?

A

2 years

108
Q

What does roll over relief do?

A

Defers payment of tax on gains

109
Q

Who is rollover relief available to?

A

Everyone - individuals and companies

110
Q

How does rollover relief work?

A

Calculate gain as normal,
Actual gain is the amount not reinvested
Rollover relief is the balance between the two

111
Q

When must rollover relief be claimed by?

A

Within 4 years

112
Q

How does non-business use affect rollover relief?

A

Cannot claim non-business use

113
Q

What qualifies for business property relief?

A

[] Chargeable assets used in a business
 Shares in trading company (need a minimum 5% holding if quoted)

114
Q

How is relief given?

A

Deducted from receiver base cost

115
Q

What do you need to gift relief?

A

A joint election within 4 years of the tax year

116
Q

What is the calculation of gift relief restriction?

A

Gain ×
(Chargeable business assets/
Chargeable assets)

117
Q

Business asset disposal relief

A

Gains at 10%
Needs ownership of more than 2 years
Qualifying disposals - whole of substantial part of an unqualified business
- assets on an unincorporated business sold less than 3 years after ceassation of trade
-Shares in a trading company as an employee or over 5% holding

118
Q

What is investors relief?

A

[] New shares issued on/after 17th March 2016 and held for ≥ 3 years
 The company must be an unquoted trading co
 The investor cannot have worked for the company

119
Q

Lifetime limits of BADR and Investors relief?

A

BADR is £1m
Investors reief = £10m

120
Q

What does a personal company mean?

A

Share holding is at least 5%

121
Q

If it ceases to be a personal company what are the options for BADR?

A

2 Elections:
Deemed disposal and re-acquisition at MV (Claimed less than 1 year after 31 Jan following end of tax year)
AND
Defer the gain until a future disposal of shares (Election needs to be made within 4 years of deemed disposal and relief claimed less than 1 year after 31 Jan following end of tax year)

122
Q

What order do you apply gift relief and business asset disposal relief?

A

Gift first

123
Q

What 2 things could deem you domiciled in the UK?

A

UK resident 15 out of last 20 years
or
Born in UK with UK domicile origin and are a resident

124
Q

Tax free benefits for employees who work abroad include

A

 Cost of board and lodgings paid by the employer
 Return trips home paid by the employer
 For absences of 60 days or more travelling expenses for 2 visits for a spouse and minor child

125
Q

DTR is calculated on a

A

source by source basis

126
Q

Remittance basis is available to

A

Resident non domiciled

127
Q

What does remittance basis mean?

A

Lose personal allowance and annual exempt amount
Remitted income all goes as non-savings
Remittance basis charge
30k 7 out of 9 years
60k 12 out of 14

128
Q

Does the automatic remittance basis have the same effects as electing?

A

No you don’t lose tax free amounts or pay RBC

129
Q

Can remittance basis be for either income or gains?

A

No it is for both or neither

130
Q

Non-residents disposing of UK residential property
3 methods for gain calc

A

Default (Proceeds - 5/4/15 cost)
Time apportionment (Proceeds - org cost then take post 5/4/15 gain)
Retrospective (Proceeds - org cost)

131
Q

Is private residence relief different for over seas?

A

Yes must be living in the UK or in the property for at least 90 days of each tax year

132
Q

What is a property rich asset?

A

A property-rich asset is usually shares in a company which derive at least 75% of their gross value from UK land (where the vendor has ≥ 25% shareholding at some point during the 2 years before sale).

133
Q

Non residents selling UK non-residential property - how is it different

A

Rebased at 5/4/19

134
Q

Non-residents must pay their CGT within

A

60 days

134
Q

Who pays Class 1B NI?

A

Employers on grossed up value of earnings in a PAYE settlement agreement

134
Q

Who pays Class 1 NI?

A

Employee and employers

135
Q

Who pays Class 1A NI?

A

Employers on BIK

136
Q

Who pays Class 2 NI?

A

Self employed

137
Q

Who pays Class 4 NI?

A

Self employed on taxable trading income

138
Q

When are P11D due?

A

19th July following end of tax year (22 if electronic)

139
Q

When is Class 1B due?

A

19th October following end of tax year (22 if electronic)

140
Q

How do you calculate Class 1B Contributions?

A

100/(100 - tax payer rate %) * value of item

141
Q

When are self assessment payment on accounts?

A

1st = 50% = 31 Jan in tax year
2nd = 50%= 31 July after tax year
Balance = 31 Jan after tax year

142
Q

Payments on account are required when

A

income tax and Class 4 NIC exceeded what was collected at source

143
Q

Who pays apprenticeship levy and how much?

A

An employer with annual pay bill over £3 million
0.5% annual pay bill

Employers get 15k allowance each year

144
Q

When is a gift in a will to political parties exempt?

A

The party has to have 2 MPs or 1 MP and more than 150,000 votes

145
Q

Rate of IHT drops to 36% with what percentage of charity donations

A

10%

146
Q

Small gift exemption from IHT is on amounts smaller than

A

250

147
Q

Marriage exemption is gifts from who for what amount?

A

Parent £5000
Grandparent £2500
Anyone else £1000

148
Q

What is maximum exemption to spouse if they are non-dom?

A

325,000

149
Q

What is a CLT?

A

Chargeable Lifetime Transfer
To discretionary trust or interest in possession trusts

150
Q

Is a transfer to a Bare Trust a CLT or PET?

A

PET

151
Q

Taper relief is applied to

A

IHT once it is calculated

152
Q

4 sections to IHT calc

A

1) Transfer values
2) Lifetime tax on CLT
3) Death tax on lifetime transfers within 7 years
4) Calculate death tax on death estate

153
Q

Does the 36% charity rate apply to CLTs/PETs on death?

A

No only death estate

154
Q

Quick succession relief is for when?

A

Recipient of chargeable transfer dies within 5 years

155
Q

Do they still have to have the property for QSR to apply?

A

No

156
Q

How is QSR applied?

A

Calculate as normal
Then apply a tax credit as below
1st Transfer * (Net received/gross) * year percentage (20% less for each year survived)

157
Q

What is fall in value relief?

A

When the market value at death is less than at transfer
Or
It was sold before death for less than transfer

Can deduct the difference for death tax
Doesn’t change amount used for NRB though

Doesn’t apply to P&M or wasting chattels

158
Q

What is the residence nil rate band?

A

Max claim £175k for value of property in death estate

Reduced when estate is over £2mil
Nothing at £2.35mil

159
Q

How do you calculate transfer of nil rate band?

A

(Remaining NRB left after 1st spouses death estate
/
NRB in force when 1st spouse died

160
Q

When must a claim for unused nil rate band be made?

A

 Two years from the end of the month of death of the survivor, or
 Three months from the date the personal representatives first act for the survivor.

161
Q

Can you transfer unused RNRB?

A

A claim to transfer unused RNRB must be made by the personal representatives within two years of the end of the month of the survivor’s death.

162
Q

To get 36% you need to have donated 10% of your

A

estate after deducting all reliefs, exemptions and nil rate bands available but not the residence nil rate band or charity donation itself

163
Q

For IHT transfer values are the loss to

A

donor

164
Q

For IHT, quoted shares are measure on the lower of

A

Quarter up
= Bid price + 1/4(offer - bid price)

Average of higher and lower marked bargains

165
Q

Unit trusts are valued at

A

Bid price

166
Q

Life assurance policies are included in

A

the estate (the proceeds) unless they are written into Trust

167
Q

Related property valuations in IHT

A

Take higher of diminution in value with and without the related persons share

168
Q

Related property is property owned by

A

A Spouse
A charity or political party that received the property via exempt transfer from either spouse

169
Q

What is the cap for additional expenses due to a foreign asset?

A

5% of foreign asset value

170
Q

What does business property relief apply to?

A

Both lifetime transfers and the death estate

171
Q

what 2 things need to be satisfied for BPR?

A

Needs to be a qualifying asset and have a sufficient ownership period (generally 2 years)

172
Q

How does BPR change for expected assets?

A

Share value × (Net Assets-Excepted Assets/
Net Assets)

173
Q

If the property is not owned by the receiver at the date of gifters death, does BPR still apply?

A

Not to death tax

174
Q

What is the additional deemed domicile rule for IHT?

A

For 36 months after they ceased being UK domiciled

175
Q

Non dom can elect to be domiciled for IHT. Advantage, disadvantage

A

Advantage of an election: No upper limit on the spouse exemption for transfers to the non-UK domiciled spouse (otherwise the limit is £325k)
– Disadvantage: The individual’s overseas assets will be brought within the UK IHT charge.

Election applies to IHT only.

Election irrevocable, although it lapses if the individual is non-UK resident for 4 consecutive tax
years.

176
Q

DTR is the lower of

A

UK Tax and overseas tax

177
Q

Tax filing due on CLT

A

12 months after end of month in which gift falls
Transferor responsible

178
Q

Tax filing due on PET

A

12 months after end of month in which the death occours

Transferee responsible

179
Q

Death estate tax filing due

A

12 months after end of month in which death occurred or if later, 3 months following the date they become PR

Personal representatives are responsible

180
Q

Can elect for 10 annual instalments of IHT for

A

 Land and buildings;
 Most unquoted shares and securities;
 A business or interest in a business.

Interest-bearing instalments are available on:
 Unquoted shares and securities which are either not a controlling holding or are in certain companies such as investment companies and property trading companies
 Businesses and interests in businesses (including partnerships) which are investment businesses or businesses in property trading
 Land
If the property is sold, the IHT on it immediately becomes payable in full.

181
Q

Long accounting periods of corp tax

A

Always first 12 months and then the rest

182
Q

When did super deduction end?

A

1.4.23

183
Q

When are 50% FYA available?

A

1.4.21 - 31.3.26
Not cars
Use AIA first

184
Q

Who gets indexation allowance?

A

Companies

185
Q

Formula for marginal rate

A

(Upper limit - aug profits) * (TTP/aug profits) *3/200

186
Q

Short accounting periods follow normal payments for corp tax but

A

less periods so do number of months in accounting period divide 3 to get number of payments

187
Q

Share matching for companies

A

Same day
Prior 9 days
Pool

188
Q

When do you index the share pool

A

At every operative event

e.g. any transfer with value

189
Q

When does SSE apply?

A

When shareholding of 10% or more for 12 months of last 6 years

Means gain is exempt

190
Q

Non-UK companies is charged corp tax on

A

Disposal of UK land and buildings
Assets deriving of 75% value from UK land and buildings

191
Q

What cap is there on R&D expenditure for external staff

A

65%

192
Q

SME gets what extra deduction for R&D

A

86% now
130% before 1.4.23

193
Q

Large company gets tax credit for R&D, what do you do?

A

20% of qualifying R&D added to taxable income and taxed then taken off final liability

194
Q

Exempt dividends and tax credits received from

A

companies which are not the receiving company’s 51% subsidiaries or sub-subsidiaries.

195
Q

Corporation tax losses

A

Use in current year against total profits
Then prior year against total profits
Then future years against total profits

196
Q

Trading corp losses terminal loss can be used

A

Last 12 month loss against prior 36 months loss

197
Q

Corp tax capital losses can only be used against

A

Chargeable gains in current or future years

198
Q

NTLR deficits can be used against

A

Current total profits
Prior year NTLR
Future total profits

199
Q

All corp tax loss relief claims need to be elected within

A

2 years after the end of the accounting period

199
Q

Property losses can be set against

A

Total profits in current year
Total profits in future year

199
Q

What is the restriction of carried forward corp tax losses?

A

A deductions allowance (DA) of £5m PLUS
– 50% of the excess profits over £5m (after current period loss relief)

5mil is shared between group

200
Q

Group companies are at least

A

75% owned

201
Q

A loss making company can surrender

A

All current period
Trading losses
Excess property losses
NTLR deficits
Excess QCDs

to be set against recipients current year only

202
Q

Losses for group must be

A

over the same period so time apportion if required

203
Q

Gains group exists if

A

there are ≥ 75% links between two or more companies and the holding company has more than 50%, (indirectly) of any sub-subsidiaries.

204
Q

Can you be part of more than one gains group?

A

No

204
Q

Can a non UK company benefit from a gains group?

A

No but it can link to UK companies

205
Q

Tax implications of gains group

A

Nil Gain Nil Loss transfers
Transfer current period gains/losses
Group rollover relief

206
Q

A degrouping charge occurs when

A

A company leaves a gains group ≤ 6 years of receiving an asset in a NGNL transfer, AND
– It still owns the asset at the date it leaves the group

207
Q

Conditions to be in a VAT group

A

More than 50%

208
Q

Benefits of VAT group

A

You can pick and chose who to include
One return
No VAT on intra group supplies
If wholly exempt company part of group may meet de minimis test

209
Q

Cons of VAT group

A

All companies are responsible for liability
One return more admin
Exempt or partially exempt may restrict input tax

210
Q

On partially exempt input tax is based on

A

Taxable turnover / total turnover

Round up to nearest %

211
Q

Advantages of opting to tax

A

Potentially increase recovery of input VAT suffered on building through capital goods scheme

Input VAT can be reclaimed on building related expenses

212
Q

Disadvantages of opting to tax

A

Tenants/buyers may not be able to recover vat charged
Stamp duty land tax is higher

213
Q

What is recovery of input vat calc in first period?

A

Recovery of input VAT = Input VAT × % taxable use (based on taxable use in VAT year of
purchase)

214
Q

What is recovery of input vat calc for annual adjustment?

A

 Annual adjustment = (1/N) × Input VAT × (current % taxable use - original % taxable use)
 N = 10 years for land + buildings, 5 years for other assets

215
Q

What is recovery of input vat calc for sale adjustment?

A

Normal annual adjustment (assuming usage to date of sale would have applied for whole year)
(2) An adjustment on sale = (P/N) × Input VAT × (R – original % taxable use)
 P = number of VAT periods remaining out of original 5 or 10
 N = 10 years for land + buildings, 5 years for other assets
 R = 0% if sale was exempt for VAT or 100% if sale was taxable for VAT

216
Q

VAT on imports

A

Pay on arrival, HMRC release goods, traders claims back on next return

or

Postponed accounting where you wait to put input vat on when the input vat goes on

217
Q

Exports are —— rated

A

Zero

218
Q

With Northern Ireland goods are

A

Treated as imports and exports

219
Q

With Northern Ireland services are

A

as normal rates

220
Q

Service supplies to business customers

A

The place of supply is where the customer’s business is located.
 Hence no VAT is charged by the supplier, but both output VAT and input VAT is accounted for by a UK customer (if purchasing from a foreign supplier) – the reverse charge under the ‘destination system’.

221
Q

Service supplies to non-business customers

A

The place of supply is where the supplier’s business is located.
 Hence the supplier charges VAT at their normal local rate for that type of service.

222
Q

Stamp duty

A

Is charged at 0.5% of the consideration payable by the purchaser on the paper transfer of shares and securities.
 The charge is rounded up to the nearest £5

223
Q

What is stamp duty reserve tax paid on?

A

Paperless transfer of shares and securities

Rate of duty is 0.5%

Filing and payment date is 7th day of the month following the transfer (or paid ≤ 14 days of trade date if payment made by CREST)

224
Q

Stamp duty land tax is paid on vat

A

inclusive price

225
Q

When does rollover relief end?

A

At the earliest of
10 years after the purchase of second item
The item stops being used in business
The item is disposed of

226
Q

Does flat rate scheme use VAT inclusive or exclusive?

A

Inclusive

227
Q

Does the limited cost trader rules use VAT inclusive or exclusive figures?

A

Inclusive

228
Q

Are vintage cars subject to CGT?

A

No all cars are exempt

229
Q

What tax is SSE for?

A

Capital gains

230
Q

What tax is BPR for?

A

Inheritance tax

231
Q

Do you get AEA when calculating death tax?

A

No only include it when working out the lifetime part

232
Q

Do running costs on a car incur employees NI?

A

No just the benefit of the car

233
Q

If asked for the cost to sole trader of adding a salary you?

A

Add salary, benefits and the Ni incurred
Less the tax they would have paid on that income so PAYE and NI

234
Q

When started a new tax company what money laundering and other regs do you have to comply with and how?

A

Money laundering
Register for anti-money laundering supervision with ICO as the appropriate supervisory body
Appoint money laundering reporting officer
Train the partners in the staff in relation to money laundering legislation
Establish appropriate, I am out procedures to risk assesses and her money laundering

Other regulatory requirements
Professional indemnity insurance. You need to obtain a practising certificate which must have a minimum level of professional indemnity insurance 600 K turnover needs 2 1/2 times it’s gross fee income with a minimum of 100 K and over that needs 1.5 million of cover

Data protection need to register the data controller with the information Commissioners office under data protection legislation 

235
Q

What do you apply PRR % to?

A

The gain

236
Q

What do you need to remember and capital gains calculations?

A

Annual exempt amount of 6K

237
Q

When is capital gains tax due?

A

Within 60 days if it’s a residential property, but everything else is due by the 31st of January after the end of the tax year 

238
Q

What is the rule called where someone pays someone else money every month but it’s exempt? And what do you need to make it except?

A

I need to be paid out of the persons income every month.
It needs to leave them with sufficient amount of money to live their normal lifestyle.
it should be a regular payment. 

An example of this is school fees for grandchildren

239
Q

When your value in shares for IHT and the spouse have shares in the same company, how do you treat them?

A

You take the value of the person shares minus the value of the shares they end up with and then repeat for the couple shareholding and then you take the higher of the two figures for the loss and that was transferred to whoever they gifted it to 

240
Q

When you value shares with the related property amounts for the spouse, do you take the shareholding price and the shareholding of by People or just the shareholding price with the holding of one person??

A

You take the shareholding price of the combine shareholding, but you only Time, is it by the shares held by the person is making a gift

241
Q

What column does interest paid go in?

A

Non savings

242
Q

Does fuel benefit go in employment income?

A

No no no no no

Tax Compliance (3 decks)

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