Revision Learns Flashcards
Residential property
Needs an extra column in a CGT calculation, even if there is PPR
Charitable donation
Don’t forget this reduces IHT if over 10%
Studying abroad
Not allowed as PPR for the working abroad unlimited allowance but can form part of 3 years for any reason
Approach to IHT questions
Don’t forget you will need to figure out GCT on chargeable disposals even if they don’t attract additional death tax. You need to know to figure out the nil rate band for future disposals.
Helpful to do it in 3 stages
Stage 1 - Transfers
Stage 2 - Lifetime tax
Stage 3 - tax on death
Chattels 5/3 rule
This restricts the gain to 5/3 of PROCEEDS less 6,000
Gifts of business propety
Under CGT - gift relief
Under IHT - possible BPR
Gift relief
If gifting shares in a company containing non-business assets, the gift relief is restricted to:
Gain×Chargeable business assets / Chargeable assets
ignore balances like debtors, liabilities, cash for chargeable assets
If it is a related person and they pay, you still need to pay CGT on the excess of what they pay you over the cost.
NRB on death
Should be the same as NRB on the CLT previously
Related property
use the husband’s holding to determine value per share but do not include as part of your holding.
You would do value at share price (pre transfer) x holdings
Less share price (post transfer) x holdings
Non dom spouse IHT
when you do the death estate working, deduct the 325,000 as the spouse exemption at the end
CGT: Entrepreneur’s Relief
Don’t forget to claim this - even if you already have gift relief - anything that doesn’t qualify will go here
CGT - valuing shares
there is no diminution in value rule. You don’t need to work on the % owned by the person and their wife. Just go on their actual percentage to value their shares.
IHT - even if several disposals in one year
still carefully check NRB at each disposal! a few months can make a difference.
VAT calculation
consider putting taxable and exempt supplies in separate columns and then attribute the mixed stuff between them
CGT - shares kept in an ISA
Exempt!
Thermal insulation
not a 100% FYA for gods sake check the book
Augmented profit for paying CT in installments
1.5 m divided by number of group companies
There could be an exemption if under 1.5m in previous year
small pools write off
Under £1,000 just write it off
gift aid
not a deduction, gross up and add to BRB
training course
check job related!
overlap profits
never more than a year!
Lying about qualifications
definitely go for professional behaviour rather than professional competence
professional behaviour
do not be associated with information that
- contains a materially false statement
- omits or obscures information required to be included where such omission or obscurity would be misleading.
MLRO responsibilities
- internal reports
- deciding whether appropriate to report to the NCA
- sending suspicious activity report
- specific offences applying to MLROs failing to make a report where one is needed
single & multiple supplies
- partial exemption rules
- distinguish between them, say different treatment, use term ancillary
- where ancillary single economic supply.
SDLT
make sure you check whether residential or non residential and use the right numbers
How does Annie lose most of her marks?
- not reading the question properly!
- being too quick - slow down a little bit and think
- check off items as you do them.
- not leaving enough space and having to move rows around - make a note on the paper of what row you put your workings in if necessary.
company gains
index them! Use the RP in the general section of the book (yellow tab at the top)
Big minus little divided by little
apply to the COST
(because you’re trying to figure out what the cost would have been in today’s money)
Flat Rate - how to calculate
First you need to work out if someone is a limited cost trader.
So, you GROSS UP THEIR INCOME then work out whether their costs are less than 2% of that turnover for the quarter or else less than £1,000/4.
Whether you are using their trade percentage or the flat rate percentage, you still need to GROSS UP their income.
BPR
Put it through with other exemptions - before nil rate band
check the percentage eligible, it might only be 50%
at least 2 years ownership
Marriage exemption
if the amount is more than the marriage exemption, the marriage exemption comes off with the annual exemptions
IHT / CGT relations
No CGT is payable on a death estate, even if there has been an increase in value.
Nil rate band
For calculating the nil rate band at death, PETs still constitute gross chargeable transfers.
Before accepting a new client
- assess key area of risk
- client ID
- engagement letter
- professional clearance
Who is responsible for a VAT Return?
- The client
- the accountant is an agent
- the accountant is responsible for the accuracy of return
- they are not required to audit the figures
- they need to apply professional scepticism
- accountant not normally liable to HMRC
Spotting capital goods scheme
L&B costing over £250k (10 years)
Computer equipment, aircraft etc. over 50k (5 years)
(Total input tax / 10 or 5 years)x(%now-%original)
Group for SDLT purposes
threshold is higher than VAT or Corp Tax - must be a 75% group
If in the same group, no SDLT
In CGT questions look out when it tells you the person’s income
if it says taxable income they’ve already taken off the personal allowance, if it says employment income they haven’t.
CGT - gift relief calculations - cars
if the assets include cars they do not go in either the chargeable business assets or the chargeable assets column. They are not chargeable assets.
If IHT question asks about different consequences of selling shares
think about the specific consequences for the scenario. They are not talking about CGT, they mean would it affect the NRB available at death, reliefs that couldn’t be claimed etc.
Corporation Tax
Always remember to put different taxes into different buckets. Therefore trading profits should be a WORKING - not part of the main calculation.
Corp Tax - patent royalties
allowable
Group relief in a question
actively state that group relief is the lower of the giving company’s loss and the other company’s profit. Can be against total profits (including NTLR)
Ethics Q: if a client doesn’t want to disclose to HMRC
- Theft
- check engagement letter for right to disclose
- don’t tell HMRC reason you are resigning
VAT: groups - why not to include an exempt group member
remember to say unless the level of exempt input VAT is de minimis
Prison sentence for accounting money laundering offence
5 years
and/or
UNLIMITED FINE
Money laundering defences
- the accountant did not know or suspect money laundering had occurred
- the accountant has a suspicion or reasonable grounds for knowing / suspecting that the client was engaged in money laundering but the knowledge came to her in privileged circumstances
- there is a reasonable excuse for not making the report (extreme circumstances such as a threat to personal safety)
- Money laundering outside UK where not unlawful in that country
Corporation Tax: Groups
Loss group must be 75% connection
Gains group must be 50% connection
Ethics question where there has been a non disclosure
- first you advise the client to disclose
- explain consequences of not disclosing
- check the engagement letter for automatic entitlement to disclose
- if the client refuses you resign
- inform client in writing
- don’t tell HMRC why
- set everything down in writing
- consider report to NCA
Valuing part disposal of land
you are doing it right, but you must make sure not to round down the percentage. Include it all in one calculation if possible or use the cell ref.
Also if there are costs in connection with the acquisition, just lump them in with the cost of the land before you apply the percentage to it.
IHT NRB on death
Include the death event as a column!
If things are exempt don’t do a column, just put a sentence before your workings.
Corporation Tax pro forma
So basically you have all the types of profit and a total to get to total profits, then you deduct all the types of loss and qualifying charitable donations to get to a total taxable profit.
Non trading loan relationships
Have a working for this so you can net off debits against credits
Indexation calculations
round to 3DPs
IHT death estate pro forma
so death estate, THEN exemptions, THEN nil rate band.
Taper relief
available on CLTs as well as PETs
Writing off loan to former employee
not allowable
If you have to work out somebody’s net disposable income
don’t forget any contributions they make for fuel etc.
Ethics question: if the firm made a mistake
- contact the client, establish the acts, check letters from HMRC are correct
- document the issue
- check engagement letter for permission to contact HMRC, contact HMRC
- legal advice, contact PII providers,
- may be required to pay penalties and interest
