Paper F6 Revision Questions and Answers
-
Upload
awais-anwar-khan -
Category
Documents
-
view
261 -
download
0
Transcript of Paper F6 Revision Questions and Answers
-
8/3/2019 Paper F6 Revision Questions and Answers
1/90
Income Tax - Individuals
Example 1
Jane earns 36,000 tax adjusted trading prot in 2010/11, receives bank interest o 4,000 and dividend income
o 5,400.
In addition she pays 800 to charity under the Git aid scheme
Calcla Ja c a payal 2010/11
1PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
2/90
Income Tax - Individuals
Example 2
rcalcla Ja c a payal h a adjd adg p c wa ly 8,000
2PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
3/90
Income Tax - Individuals
Example 3
Benny has tax adjusted trading prot o 120,000 in 2010/11. He paid 12,000 to charity under the git aid
scheme and 1,000 o qualiying interest payments.
Calcla by c a payal.
3PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
4/90
Income Tax - Individuals
Example 4
ug apl 3 - rcalcla by c a payal ag h al cd 45,000 ddd
c 2010/11.
4PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
5/90
Income Tax - Individuals
Example 5
Anne was born on 18th September 1940 and has Net Income o 25,000
D h pal ag allwac h ld 2010/11
5PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
6/90
Income Tax - Individuals
Example 6
Tony and Kathy are a married couple. Tony has employment income o 50,000 and receives rental income o 5,000.
Kathy has no income.
Dc hw, a a cpl, hy cld dc h all a laly
6PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
7/90
Income Tax - Property Business Prot
Example 7
Robert owns two properties.
Property A is let out unurnished at an annual rental o 4,000 rom 1 July 2010.
Rent is payable quarterly in advance. Expenses amounted to 1,500 or the year to 6 April 2011 on an accruals basis.
Property B is let out urnished at an annual rental o 3,000, rom 1 August 2010.
Rent is payable annually in advance. Expenses amounted to 2,200 or the year to 6 April 2011. In addition, Robert
claimed a wear and tear allowance.
D r Ppy ic ad 2010/11.
7PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
8/90
Income Tax - Property Business Prot
Example 8
Molly grants a 20-year lease on a shop on 1 August 2010 or a premium o 25,000. The annual rent o 12,000 is
payable yearly in advance.
Calcla mlly Ppy ic 2010/11 ad h l aalal h a h p pad.
8PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
9/90
Income Tax - Property Business Prot
Example 9
Ben rented a urnished property to students at a monthly rental o 1,000 until 31 July 2010. The property was
redecorated in August and let again rom 1 September 2010 or 1,200 per month. Details o expenditure during
2010/11
Redecoration 2,010
Water rates 150
New washing machine 250
Gardening 520
Legal ee or tenancy agreement 75
Mortgage interest 3,700
Insurance 305
On 1 May 2010 he acquired another urnished property. He paid service charges o 25 per month and mortgage
interest o 500 per month. The property was let rom 1 August 2010 at a monthly rent o 600.
(a) Calcla b Ppy ic 2010/11
() What diference would it have made i the econd property wa claed a a Furnihed Holiday letting
ppy.
9PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
10/90
Income Tax - Property Business Prot
Example 10
Jimmy rents a room in his main residence to Kenny. Jimmy receives rental income o 4,750 and incurs relevant
expenses o 300 in 2010/11
Calcla Jy Ppy ic ag all lc a clad 2010/11
10PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
11/90
Income Tax - Unincorporated Business
Example 11
Kerrys net prot or the year ended 31 December 2010 was 30,000 included the ollowing:
Expenses:
Proprietors wages 10,000
Depreciation 2,800
Contribution to Political Party 76
Purchase o van or business 20,000
Fines or inadequate encing o equipment 750
Legal ees or acquisition o a 21 year lease 600
Donation to National Charity 100
Entertaining customers 300
Car Expenses 1,200
Income:
Income rom urnished lettings (net o Expenses) 1,800
Bank deposit interest (net) 500
Dividends (net) 4,200
Kerry took goods rom the business or her own use, with a cost o 280 and selling price 400.
Kerry paid the business 280 or the goods.
Kerry can show that her business use o the car is 80%.
Calcla h adjd p ya dd 31 Dc 2010
11PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
12/90
Income Tax - Unincorporated Business
Example 12
Debra, a sole trader, prepares accounts to 31 December.
The WDVs or capital allowances purposes, as at 31/12/09 were as ollows:
General pool 30,000
Expensive car (private use 20%) 15,000
During the year ended 31/12/10 the ollowing transactions occurred:
1 January purchased plant 40,000
3 March purchased car, CO2
emissions o 135g/km 11,000
10 March purchased car, CO2emissions o 106g/km 18,000
18 April bought a printing press 4,000
6 May sold plant 2,000
10 June sold expensive car 16,000
12 December purchased a long lie asset 160,000
The printing press is to be treated as a short-lie asset. All assets sold were disposed o or less than cost.
Calcla h capal allwac h ya dd 31 Dc 2010.
12PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
13/90
Income Tax - Unincorporated Business
Example 13
Elliot bought a new industrial building on 1 January 2011, incurring the ollowing costs:
Land 40,000
Building 200,000
Oces 50,000
He brought the building into industrial use immediately and continued to use it or industrial purposes until its
date o sale on 1 January 2013.
Elliot sold the building or 230,000 (including 50,000 or the land and 35,000 or the oces).
Calcla h allwac g ell. (H ppa acc 31 mach).
13PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
14/90
Income Tax - Unincorporated Business
Example 14
Felix, a scientic instrument manuacturer, makes up annual accounts to 31 March. He bought a new industrial
building on 1 July 2010 and bought it into use straight away. The building cost 400,000 and was used or industrial
purposes until 30 June 2011. The actory was used or non-industrial purposes or the period 1 July 2011 to 30
September 2012.
On 1 October 2012 the actory was again in industrial use and continued to be so until its sale on 30 June 2013
or 475,000 to Terry.
Calcla h allwac aalal Fl all la pd acc.
14PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
15/90
Income Tax - Unincorporated Business
Example 15
James prepares accounts to 30 September annually. His tax adjusted trading proft or the two years to 30 September
2010 were:
Year to 30 September 2009 17,000
Year to 30 September 2010 19,000
shw h a 2009/10 ad 2010/11
15PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
16/90
Income Tax - Unincorporated Business
Example 16
Adam commenced trading on 1 July 2008. He prepared accounts to 30 June each year. His tax adjusted trading
prot or the rst two years were as ollows:
Year ended 30 June 2009 36,000
Year ended 30 June 2010 42,000
shw h a all la ya.
16PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
17/90
Income Tax - Unincorporated Business
Example 17
Emily commenced trading on 1 July 2008. She prepared accounts to 31 March 2010 and annually thereater. Her
tax adjusted trading prot or the rst two accounting periods were as ollows:
21 months ended 31 March 2010 63,000
Year ended 31 March 2011 40,000
shw h a all la ya.
17PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
18/90
Income Tax - Unincorporated Business
Example 18
Patricia commenced trading on 1 September 2008.
She prepared accounts to 30 June 2009 and annually thereater. Her tax adjusted trading prot or the rst two
periods were as ollows:
10 months ended 30 June 2009 40,000
Year ended 30 June 2010 54,000
shw h a all la ya.
18PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
19/90
Income Tax - Unincorporated Business
Example 19
Jacqui commenced trading on 1 July 2008. She prepared accounts to 30 April 2010 and annually thereater. Her
tax adjusted trading prot or the rst two periods were as ollows:
22 months ended 30 April 2010 66,000
Year ended 30 April 2011 30,000
shw h a all la ya.
19PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
20/90
Income Tax - Unincorporated Business
Example 20
Matthew commenced trading on 1 May 1999. Ater trading protably or some years, he ceased trading on 31
March 2011. His tax adjusted trading prot or the nal three periods is as ollows:
Year ended 30/4/2009 37,000
Year ended 30/4/2010 40,000
Period ended 31/3/2011 36,000
Assume his overlap prots (or the period 1/5/99 - 5/4/00) were 25,000.
shw h a all la ya.
20PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
21/90
Income Tax - Unincorporated Business
Example 21
Anne decides to change her accounting date rom 31 March to 30 June making up accounts or the three month
period to 30 June 2009. Annes tax adjusted trading prot is as ollows:
Year ended 31 March 2009 72,000
Three months to 30 June 2009 16,000
Year ended 30 June 2010 90,000
shw h a all la ya.
21PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
22/90
Income Tax - Unincorporated Business
Example 22
Tony, a sole trader, commenced trading on 1 July 2006. He has now decided to change his accounting date to 30
September by making up accounts or the 15-month period to 30 September 2009. Tonys tax adjusted trading
prot is as ollows:
Year ended 30 June 2007 27,000
Year ended 30 June 2008 36,000
Period ended 30 September 2009 45,000
Year ended 30 September 2010 54,000
shw h a all la ya.
22PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
23/90
Income Tax - Unincorporated Business
Example 23
Mike started trading on 1 November 2008. His trading results beore deducting capital allowances were as ollows:
8 months ended 30 June 2009 36,000
Year ended 30 June 2010 44,000
He bought a car with CO2
emissions o 145g/km on 9 November 2008 or 15,000 or the sole use o his salesman.
Calcla h a adjd adg p aal a 2008/09, 2009/10 ad 2010/11.
23PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
24/90
Income Tax - Unincorporated Business
Example 24
Barbara makes up accounts to 31 March each year.
For the year ended 31 March 2011 she incurred a trading loss o 10,000.
D whch ya baaa ay cla l l?
24PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
25/90
Income Tax - Unincorporated Business
Example 25
Ken gave up his job with an orchestra, and started his own musical business on 1 November 2007.
His results are as ollows:
Year ended
31 October 2008 loss (50,000)
31 October 2009 prot 20,000
31 October 2010 prot 15,000
31 October 2011 prot (estimated) 27,000
Kens only income was employment income as ollows:
Up to and including 2006/07 60,000 p.a.
2007/08 (7 months) 35,000
(a) shw hw h l wld ld d c ya, cayack, pcal pg ya l l ad
cay wad l.
() Whch wld h cal way K l h l?
25PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
26/90
Income Tax - Unincorporated Business
Example 26
Bill and Ben share prots equally up to 31 October 2010 but in the ratio 2:1 thereater. Their tax adjusted trading
prots or the year to 31 December 2010 are 48,000.
shw h allca h a adjd adg p h pa 2010/11
26PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
27/90
Income Tax - Unincorporated Business
Example 27
Tracy and Donna are in partnership sharing profts equally. On 31 December 2009 Donna retired. Ethel was admitted
to the partnership on 1 January 2010 and was entitled to one third o the prots.
The tax adjusted trading prot or the years to 30 June 2009, 2010 and 2011 are 40,000, 54,000 and 60,000.Respectively Donna has overlap prots brought orward o 15,000.
shw h a adjd adg p aal 2009/10, 2010/11 ad 2011/12 all pa.
27PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
28/90
Income Tax - Unincorporated Business
Example 28
Gordon has the ollowing income and gains:
2009/10 2010/11
Total income 6,000 7,000
Capital gains 20,000 16,000
He incurred a trading loss o 50,000 in his year ended 31 December 2010.
show Gordon taxable income and chargeable gain or 2009/10 and 2010/11 auming that he relieve hi
adg l a aly a pl.
28PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
29/90
Income Tax - Employee Benets
Example 29
Thomas earns 40,000 per annum. He is provided by his employer with a at close to the oce. Its annual value
is 4,100. The at was purchased in 2002 or 250,000 and was rst made available to Thomas in January 2006
when it was worth 280,000.
The employer paid heating bills o 580 in 2010/11. The urnishings in the house cost 20,000.
Assume an ocial rate o interest o 4%.
Calcla tha pc h p h accda ad acad p.
29PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
30/90
Income Tax - Employee Benets
Example 30
Clare earns 20,000 p.a. and is provided with a petrol Volvo T5 by her employer. The car, which was purchased in
January 2006, had a list price o 30,000. The car was rst made available to Clare on 1 July 2010. The car has an
ocial CO2
emission rate o 188 grams per kilometre. In the year 2010/11 she drove 16,000 miles, o which 2,000
were private. Clare contributes 20 per month to her employer or the private use o the car. Clare is also providedwith uel by her employer or private use.
Calcla Cla pc h cpay ca.
30PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
31/90
Income Tax - Employee Benets
Example 31
Mike was rst provided with a CD player or his private use on 6 April 2009. It had a market value o 6,000.
His employer transerred the CD player to Mike on 6 April 2010, when it was worth 4,200. Mike was required by
his employer to pay 500.
Calcla mk 2009/10 ad 2010/11.
31PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
32/90
Individuals - Pensions
Example 32
Tony is sel-employed
His tax adjusted trading prot assessable amount or 2010/11 is 20,000.
Y a qd calcla h a p c h cld a l 2010/11.
32PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
33/90
Individuals Capital Gains Tax
Example 33
Gill sold a actory used in her trade in November 2010 or 140,000. She had bought it in January 1988 or 60,000.
The disposal was not part o the sale o the entire business.
Gill made one other disposal in 2010/11 realising a capital loss o 4,500.
Gills Taxable income in 2010/11 is 32,000.
Calcla Gll capal ga a payal 2010/11 ad a h d da pay.
33PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
34/90
Individuals Capital Gains Tax
Example 34
Frederick bought an Antique vase costing 3,000 in July 1997 and sold it in February 2011 or 4,500
James bought a painting costing 2,000 in September 1999 and sold it September 2010 or 7,500
Sam bought a rare manuscript in July 1993 or 10,000 and sold it in August 2010 or 3,000
Calcla h capal ga capal l ag ach ddal.
34PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
35/90
Individuals Capital Gains Tax
Example 35
Billy bought a set o ten terracotta warriors in March 1997 or 20,000. He sold 2 warriors in July 2010 or 6,000.
The remaining 8 warriors were worth 28,000 in July 2010.
Calcla h Capal Ga 2010/11
35PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
36/90
Individuals Capital Gains Tax
Example 36
Simon purchased an oce block as an investment or 500,000 in April 2002. In September 2010 it was damaged
by re. Restoration Expenditure o 70,000 was incurred in February 2011 and Simon received insurance money
o 60,000 in June 2011. The oce block was worth 1,000,000 ater the damage.
Assume Simon elects to deduct the proceeds o insurance against the cost o the building when the restored
asset is sold.
Calcla h Capal ga ag ( ay) J 2011 ad h a c h a a q dpal.
(A h a a 2010/11 c h ).
36PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
37/90
Individuals Capital Gains Tax
Example 37
Betty purchased an asset or 25,000 on 1 October 1991 which was destroyed by re on 30 September 2010.
She received compensation o 36,000 rom her insurance company on 1 January 2011 and purchased a replacement
asset or 34,000 on 1 February 2011.
Calcla h Capal Ga ag 1 Jaay 2011 ad h a c h plac a.
37PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
38/90
Individuals Capital Gains Tax
Example 38
Nancy owns 5,000 shares in Horwick plc, a quoted company. They were acquired in June 2007 and September
2009 or a total cost o 18,000. Nancy sells 2,000 o the shares in December 2010 or 36,000.
Nancy is not an employee o Horwick plc.
Cp h Capal Ga ag h al h ha Dc 2010
38PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
39/90
Individuals Capital Gains Tax
Example 39
Rebecca bought shares in Surpass plc as ollows:
Shares
6 October 1990 800
1 December 1993 1,000
1 August 2002 500
11 November 2010 1,800
On 1 June 1996 there was a bonus issue o 1:4.
On 1 November 2010 she sold 3,550 shares.
idy h ha rcca ha dpd g h ddal ha achg l.
39PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
40/90
Individuals Capital Gains Tax
Example 40
Kit sold her unincorporated business on 31 October 2010 which she had owned or the previous 10 years, giving
rise to the ollowing Capital Gains and Capital Losses
Freehold actory 200,000
Warehouse (150,000)
Goodwill 350,000
Investment property 120,000
She also disposed o shares in Planet Limited in June 2010, (a company in which she owned an 8% holding and
was a part time employee or the last 5 years), giving rise to a capital gain o 700,000
Kit had capital losses brought orward o 20,000, she has taxable income o 30,000.
Calcla K Capal Ga ta Laly ad a h d da pay.
40PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
41/90
Individuals Capital Gains Tax
Example 41
Chloe, a trader, disposed o land used in her business or 750,000 in March 2011. The land had cost her 100,000
in June 1988. The sale was not part o the disposal o the entire business. She purchased a actory (as part o the
purchase o another unincorporated business), or trading use, in November 2011 or 700,000.
Calcla h chagal ga h dpal h lad ad h a c h acy.
41PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
42/90
Individuals Capital Gains Tax
Example 42
Peter sold a business asset to Kris in October 2010 or 40,000 when its market value was 75,000. The asset had
cost Peter 25,000 in March 1990.
Git relie is claimed.
Calcla P chagal ga ad h a c h a K.
42PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
43/90
Individuals Capital Gains Tax
Example 43
Jacqui bought a house in Manchester on 6 July 1991. She lived in it until 6 July 1996. She then took a job in
Birmingham living in accommodation provided by her employer, and let out the house in Manchester.
She let the job on 6 January 2006 and travelled or 2 years, returning to the house in Manchester on 6 January 2008.The house was empty during this period. She sold the house on 6 July 2010, making a capital gain o 190,000.
Calcla h chagal ga a all la l
43PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
44/90
Inheritance Tax
Example 44
Jasper died on 28 February 2011. His estate comprised o the ollowing:
House 500,000
Bank account 220,000
Cash ISA 10,000
Motor vehicles 35,000
Credit card debts 2,000
Repayment mortgage on the house 100,000
Funeral expenses amounted to 7,000
Under the terms o his will, Jasper let the house to his wie and the rest o the estate to his daughter.
During his lie Jasper made various gits as ollows:
12 November 2003 - Git to a trust o 200,000
15 December 2003 - Git to his daughter o 50,000
18 March 2007 - Git to his nephew o 175,000 on the occasion o his marriage
26 August 2009 - Git to a trust o 250,000.
Jasper agreed to pay any lietime IHT due.
The relevant nil rate bands are as ollows:
2003/04 255,000
2006/07 285,000
2009/10 325,000
Calcla h iHt ag h l g ad h iHt a a l dah.
sa h d da pay ay iHt ag ad wh wll pay ad h iHt.
44PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
45/90
Corporation Tax
Example 45
In the year to 31 March 2011 Cannock plc received and (paid) the ollowing amounts:
Tax adjusted trading prot 280,000
Bank interest (accrued) 20,000
Debenture interest (accrued) 30,000
Dividends received (net) 4,500
Git Aid payment (1,000)
Dividends paid (net) (80,000)
Calcla cpa a payal y Cack plc.
45PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
46/90
Corporation Tax
Example 46
Fallings Ltds prot beore tax or the year ended 31 December 2010 was 90,000 included the ollowing:
Expenses:
Directors salary 42,000
Depreciation 2,800
Git Aid donation to charity 180
Purchase o van or business 20,000
Fines or inadequate encing o equipment 750
Legal ees or acquisition o a 21- year lease 600
Amortisation o lease (cost 42,000) 2,000
Christmas party or staf 480
Entertaining customers 300
Expenses o car used by a director 1,200
Political donation to the Green Party 100
Income:
Income rom urnished lettings (net o Expenses) 1,800
Bank deposit interest 500
Dividends (net) 4,200
A director took goods rom the business or her own use, with a cost o 280 and selling price 400. The directors
loan account was debited with the 280 cost.
The director with a company car can show that her business use o the car is 80%.
Calcla h adjd p h ya dd 31 Dc 2010.
46PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
47/90
Corporation Tax
Example 47
Westcrot Ltd, a small company which manuactures greetings cards, prepares accounts to 31 December.
The WDVs or capital allowances purposes, as at 31/12/09 were as ollows:
General pool 30,000
Expensive car (private use by director 20%) 15,000
During the year ended 31/12/10 the ollowing transactions occurred:
1 January purchased plant 40,000
3 March purchased car CO2
emissions o 145g/km 11,000
10 March purchased car CO2
emissions o 108g/km 18,000
6 May sold plant 2,000
10 June sold Expensive car 16,00018 September bought printing press 4,000
12 December purchased a long lie asset 160,000
The printing press is to be treated as a short-lie asset. All disposals were or less than cost.
Calcla capal allwac h accg pd dd 31 Dc 2010.
47PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
48/90
Corporation Tax
Example 48
Skip plc had the ollowing income and expenditure or the year ended 31 March 2011.
Adjusted prots 500,000
Capital allowances 20,000
Building society interest amount received in the year 30,000
amount accrued or the year 24,000
Debenture interest amount received in the year 25,000
amount accrued or the year 28,500
Git Aid amount paid 1,800
Calcla h taal tal P ya dd 31 mach 2011.
48PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
49/90
Corporation Tax
Example 49
Bugs Bunny Ltd sold a actory used in its trade in November 2010 or 140,000. The company had bought it in
January 1998 or 60,000.
Assume that the indexation actor or the period January 1998 to November 2010 is 0.358.
The company made one other disposal in its year to 31 March 2011 realising a loss o 4,500.
Calcla h n chagal Ga ag h dpal h w a.
49PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
50/90
Corporation Tax
Example 50
ST Limited sold 5,000 shares in JM Ltd or 50,000 on 12 January 2011. They had been acquired as ollows:
February 1992 1,000 shares costing 1,500
January 1994 1:4 Bonus issue
July 1997 2,000 shares costing 4,000
February 2002 1:5 Rights issue at 1.75 per share
January 4th 2011 2,000 shares costing 4,500
Calcla h chagal ga cld h Cpa a cpa.
RPIs are: Feb 1992 136.3
Jan 1994 141.3
July 1997 157.5
Feb 2002 173.8
Jan 2011 230.0
50PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
51/90
Corporation Tax
Example 51
Daisy Ltd, a trading company disposed o a building or 750,000 in March 2011. The building had cost the company
100,000 in June 1990.
Assume an indexed rise o 70% to March 2011. Daisy Ltd then purchased land, or trading use, in November 2011or 700,000.
Calcla h chagal ga h dpal h ldg ad h a c h lad.
51PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
52/90
Corporation Tax
Example 52
Bolton plc had the ollowing results or the years ending 31 December.
2009 2010 2011
Tax adjusted trading prot/(loss) 10,000 (18,000) 42,000
Interest income 2,000 2,000 2,000
Git aid payment 1,000 1,000 1,000
shw hw h l ld, ag bl plc cla l l a a pl.
52PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
53/90
Corporation Tax
Example 53
Z Ltd made a loss o 120,000 in the year to 31 December 2010, and T Ltd made a Taxable Total Prot o 100,000
in the year to 30 September 2010.
Calcla h a adg l ha Z Ld ca d t Ld t Ld accg pd 30
sp 2010
53PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
54/90
Corporation Tax
Example 54
J Ltd and K Ltd had the ollowing results:
y/e
31/3/2010
y/e
31/3/2011
J Ltd Tax adjusted trading prot 500,000 200,000
K Ltd Tax adjusted trading prot/(loss) 190,000 (120,000)
Calcla h taal tal P ach cpay ya dd 31 mach 2010 ad 31 mach 2011 ag
h tadg l K Ld h cal a h gp
54PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
55/90
Income Tax - PAYE Coding
Example 55
William Ltd has the ollowing income or the year to 31 March 2011:
Tax adjusted trading prot 1,500,000
Overseas rental income (amount received net o 3% withholding tax) 155,200
Calcla h cpa a Wlla Ld h ya dd 31 mach 2011
55PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
56/90
Income Tax - Sel Assessment
Example 56
A taxpayers tax liability or 2009/10 was as ollows:
Income tax 9,400
Less: Tax deducted at source (2,100)
7,300
Class 4 NIC 700
CGT 3,500
11,500
Calcla h pay acc 2010/11 ad a h d da pay
56PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
57/90
Income Tax - Sel Assessment
Example 57
Continuing with the previous example, suppose that the taxpayers liability or 2010/11 is as ollows:
Income tax 10,800
Less: Tax deducted at source (2,500)
8,300
Class 4 NIC 800
CGT 4,600
13,700
Calcla h alacg pay d 31 Jaay 2012 ad h pay acc 2011/12
57PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
58/90
Income Tax - PAYE Coding
Example 58
Maureen, who is single, is a basic rate taxpayer.
She paid a personal pension premium o 1,000 (net) and 120 proessional subscription in 2010/11.
She received benets o 320 rom her employer.
She received untaxed income o 250, the tax liability on which is discharged by set-of against allowances.
Underpaid tax o 150 rom an earlier year is to be collected via her code.
Calcla ma PAYe a cdg c 2010/11.
58PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
59/90
Corporation Tax - Sel Assessment
Example 59
Daisy limited has Taxable Total Prots o 2 million in year end 31 March 2011
(a) Calcla h cpa a ad h d da pay
() Wha h lg da?
59PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
60/90
VAT
Example 60
YR Ltd commenced trading on 1 June 2010. The value o its taxable supplies were 4,000 per month until 1 April
2011 when they increased to 8,500 per month.
Wh d Yr Ld ha y HmrC ha d g vAt ad wh ga c?
60PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
61/90
VAT
Example 61
Dolphin Ltd commenced trading on 1 June 2010. The value o its taxable supplies was 3,000 per month until 1
April 2011 when the company signed a contract such that monthly sales were expected to be 70,000.
Wh Dlph Ld qd g vAt ad y wha da y HmrC?
61PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
62/90
VAT
Example 62
In the quarter to the 30 June 2011, ST Limited made standard rated supplies o 100,000 and zero rated supplies
o 50,000. It ofered a 3% discount or payment within 28 days. Approximately a third o its customers took up
the discount.
It made standard rated purchases o 61,250 (VAT inclusive), which included 2,250 or entertaining customers.
It made zero rated purchases o 12,000.
It wrote of irrecoverable debts o 7,875 and 5,525 in respect o amounts due 1 September 2010 and 1 April
2011. Both gures are VAT inclusive.
Purchased a car or the salesman who uses the car or private use costing 21,250 (including VAT) and machinery
costing 11,750 (including VAT)
shw h cldd h vAt qa 30 J 2011.
All gures are VAT exclusive unless otherwise stated.
Assume a VAT rate o 20% throughout.
62PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
63/90
VAT
Example 63
BW Ltd has the ollowing sales & purchases in year ended 30 June 2011:
Standard rated sales o 70,500 (including VAT) and zero rated sales o 5,000.
Standard rated purchases o 11,750 (including VAT)
i h la fa a pcag 9% h ad, lla adal h fa a ch.
63PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
64/90
VAT
Example 64
Daisy Ltds VAT return or quarter to 30 June 2010 was submitted on 15 August 2010 with the payment o VAT
5,000 also on this date.
The return and payment or quarter to 30 September 2010 was on time.
The next return to 31 December 2010 was on time, but the related VAT payment o 40,000 was only paid on 10
February 2011.
Dc h vAt cqc h la h vAt ad/ pay Day Ld.
64PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
65/90
VAT
Example 65
ouline he adanages and disadanages f Grup vAt regisrain and uline which cmpanies can frm par
h vAt gp
65PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
66/90
VAT
Example 66
Mars Limited exports 100,000 o goods to customers in New Zealand (Non EU country) and dispatches 50,000
o goods to non business customers in Germany (EU country) in the quarter to 30 June 2011.
In addition within this VAT quarter it imports 150,000 of goods from an Australian business supplier (non EUcountry) and has acquisitions rom a business supplier in France (EU country) o 75,000.
Mars Limited makes wholly taxable supplies.
Ppa a ac ma Ld vAt 30 J 2011, plag y a ach vAt
pp.
66PAPer F6 revision Questions DeCember 2011 exAminAtions
-
8/3/2019 Paper F6 Revision Questions and Answers
67/90
1PaPer F6 revision answers December 2011 examinations
i t - iddul
Answer to example 1
JaneIncomeTaxcomputation
ng sg Ddd
taxadjustedtradingprot
Bankinterest/0 Dividends/0
TotalIncome
Less:PA ()
TaxableIncome
Taxcalculation
Nonsavings
%
Savings
%
Dividends:
[+(/0)==]
%
%
Taxliability
Lesstaxdeductedatsource
Dividends% ()Bankinterest% ()
Taxpayable
Thestartingrateo%orsavingsincomeisnotapplicableastaxablenon-savingsincomeisabove
Answer to example 2
ng sg Ddd
taxadjustedtradingprot
Bankinterest/0
Dividends/0
TotalIncome Less:PA ()
TaxableIncome
-
8/3/2019 Paper F6 Revision Questions and Answers
68/90
-
8/3/2019 Paper F6 Revision Questions and Answers
69/90
3PaPer F6 revision answers December 2011 examinations
Answer to example 4
BennyIncomeTaxcomputation
ng Ddd
Taxadjustedtradingprot
Dividendincome/0
Totalincome
Less:reliesQualiyinginterest ()
Netincome
LessPersonalallowance( W) ()
TaxableIncome
IncomeTax
Nonsavings
( W) %
%
(W)Dividends
()
/%
/%
Incometaxliability
Lesstaxdeductedatsource
Dividends(%) ()
Incometaxpayable
(W) Netincome
Less:Grossgitaidpayment(/0) ()
AdjustedNetIncome
AsadjustednetincomethepersonalallowanceisreducedtoNil
(W) +=
(W) +=
Answer to example 5
InAnneisyearsold
Personalallowance
Less (-) ()
RevisedPersonalallowance
Answer to example 6
AsTonyisahigherratetaxpayeronhisemploymentincomehehasataxliabilityonhispropertyincomeo%.
Kathyhasnoincomeandassuchiswastingherpersonalallowanceandbasicratebanding.
ItwouldbebetteriKathyweretoownthePropertysuchthatthepropertyincomeisassessedonher.Thepropertyincomeo
willbecoveredbyherpersonalallowancesonoliabilitywilloccur.
Thiswillsavethecoupletaxo(%).
-
8/3/2019 Paper F6 Revision Questions and Answers
70/90
PaPer F6 revision answers December 2011 examinations4
i t - Ppy bu Pf
Answer to example 7
Assessableamountoryear
PropertyA
9/1
Less:Expenses ()
PropertyB
8/1
Less:Expenses ()
Wearandtearallowance% ()
()
PropertyIncome
Answer to example 8
Molly-PropertyIncomeor:
Premium(-)
Rentalincome8/1
Tenant:Relieavailable15 500
20775
, pa
Answer to example 9
(a) Ppy (1) Ppy (2) tl
Rentalincome
)+ .)
Lessexpenses:
Redecoration () ()
Waterrates () ()
Gardening () ()
Legalees () ()
Mortgageinterest () ()
Insurance () ()
Wearandtearallowance%() () () ()
Servicecharge() () ()
Mortgageinterest() () ()
()
Prop er ty I nc ome o r =
(b) IProperty ()wasFurnishedHoliday lettingproperty thenthelosswouldnothavebeen osetagainstProperty()
income.
ThePropertyincomewouldhavebeenorandthelossonProperty()wouldbetreatedasatradingloss
orosetagainstthetotalincomeandgainsoandor.
Inadditionthelosscouldbeosetagainsttotalincomeoandundernewbusinessrulesor
carriedorwardagainstutureprots.Inadditionthewear&tearallowancewouldnotbeavailablebutcapitalallowances
couldbeclaimedonthecostotheurnitureinstead.
-
8/3/2019 Paper F6 Revision Questions and Answers
71/90
5PaPer F6 revision answers December 2011 examinations
Answer to example 10
( a) Normalassess ment
Rentalincome
Lessexpenses ()
Wear&tearallowance% ()
PropertyIncome
(b) R ent a Ro om wit h election
Rentalincome lessrentaroomrelie ()
PropertyIncome
TheRentaRoomrelieelectionshouldbemade.
i t - Upd bu
Answer to example 11
Netprotperaccounts
Addback
Proprietorswages
Depreciation
Politicaldonation
Purchaseovan
Fine
Legalees
Donationtonationalcharity
Entertaining
Carexpenses(%)
Protongoodsorownuse()
Less:
Incomeromurnishedlettings
Bankdepositinterest
Dividends
()
Adjustedprot
-
8/3/2019 Paper F6 Revision Questions and Answers
72/90
PaPer F6 revision answers December 2011 examinations6
Answer to example 12
Capitalallowancesyearended
Gl
pl
80%
ep
p u (1)
spl
pl
sh l
(1)all
WDVb
AdditionsqualiyingorAIA
Longlieasset
LessAIA(Maximum) ()
AdditionsqualiyingorAIA
Plant
Printingpress
AIA ()
Otheradditions
MotorcarCO emissions--gkm
Disposals () ()
()
WDA@% ()
BalancingCharge @% ()
WDA@% ()
WDA@% ()
AdditionsqualiyingorFYA
Motorcar
-
8/3/2019 Paper F6 Revision Questions and Answers
73/90
7PaPer F6 revision answers December 2011 examinations
Answer to example 15
Theseormthebasisortheassessableamountsorand:
(Yearto)
(Yearto)
Answer to example 16
Thetaxadjustedtradingprotassessableamountsareasollows:
(-)
9/1
(Yearto)
(Yearto)
Overlapprotsarerepresentingmonthsoprot.
Answer to example 17
Thetaxadjustedtradingprotassessableamountsareasollows:
(-)
9/1
(Yearto)
2/1
(Yearto)
Nooverlapprot.
Answer to example 18
Thetaxadjustedtradingprotassessableamountsareasollows:
(-)
7/10
(-)
+(2/1)
(Yearto)
Overlapprotsarerepresentingmonthsoprot
-
8/3/2019 Paper F6 Revision Questions and Answers
74/90
PaPer F6 revision answers December 2011 examinations8
Answer to example 19
Thetaxadjustedtradingprotassessableamountsareasollows:
(-)
9/
(-)
2/
(Yearto)
2/
(Yearto)
Overlapprotsarerepresentingmonthsoprot.
Answer to example 20
Thetaxadjustedtradingprotassessableamountsareasollows:
(Yearto)
(monthsromto)
(+)
Lessoverlapprots ()
Finalassessableamount
Answer to example 21
Thetaxadjustedtradingprotassessableamountswillbeasollows:
Yearto
-monthperiodtonewaccountingdateo
to9/1
Periodto
Yearto
Theprotsoassessedinareoverlapprotssincetheywerealsoassessedin.Theywillbecarried
orwardandwouldnormallybeosetwhenAnneceasestrading.
Answer to example 22
Thetaxadjustedtradingprotassessableamountswillbeasollows:
to9/1
Theprotsoareoverlapprotsrepresentingmonthsoprot.
Yearto
Yearto
-monthperiodto
Less:Overlapprots/ ()
Yearto
Inprotsormonthsareassessed.Becausethenormalbasisoassessmentisthatonlymonthsprotsare
assessedTonyisallowedtoosetmonthsworthohisoverlapprotsthatarosewhenhecommencedtrading.Theseoverlap
protsareoraperiodomonthssotheosetisbasedonaractiono/.
-
8/3/2019 Paper F6 Revision Questions and Answers
75/90
9PaPer F6 revision answers December 2011 examinations
Answer to example 23
CapitalallowancesPl all
monthsto
Addition(Motorcar-gkm)
WDA%8/1 ()
WDVc
ye
WDA% ()
WDVc
AdjustedprotPf ca t djud dg pf
monthsto ()
ye ()
Taxadjustedtradingprotassessableamounts:
to
5/
t o
+/1
ye
Overlapprotsare(+(/1))representingmonthsoprot
Answer to example 24
Lossisin.
ReliemaybeclaimedinandoragainstTotalincomeandthengains.Inadditionthelossmaybe carried
orwardagainsttherstavailabletradingprotothesametrade.
Answer to example 25
(a) Taxadjustedtradingprotassessableamounts:
Actual(-) Nil
monthstoaccountingdate(ye) Nil
CYB(ye)
CYB(ye)
CYB(ye)
CurrentandCarrybackrelie5/1
RelieavailableagainstTotalIncomeoandor
Loss
Less:Allocatedto ()
RelieavailableagainstTotalIncomeoandor
Specialopeningyearrelie
RelieavailableagainstTotalIncomeoand
RelieavailableagainstTotalIncomeoand
Carryorwardrelie
Loss Relievedagainsttaxadjustedtradingprot ()
()
()
-
8/3/2019 Paper F6 Revision Questions and Answers
76/90
PaPer F6 revision answers December 2011 examinations10
(b) ThemostbenecialwayorKentorelievehislosswouldbe:
ThetradinglossoorshouldberelievedunderspecialopeningyearlossrelieagainstTotal
Incomeo;andthetradinglossoorshouldberelievedunderspecialopeningyearlossrelie
againstTotalIncomeo.
Thisgivesrelieasearlyaspossibleatarateo%andavoidswastingpersonalallowances.
Answer to example 26
tl bll b
-(/1)
-(2/1)
ye
Answer to example 27
Allocationoprots: ty D ehl
ye()
ye()()
()
ye()
TaxadjustedtradingprotAssessment ty D ehl
CYBye
Finalyearmto
+
Lessoverlapprot ()
Firstyear
(to)
/
Secondyear
()
(+61)
CYBye
CYBye
Ethelhasoverlapprotso(to)and(to)totalling
-
8/3/2019 Paper F6 Revision Questions and Answers
77/90
-
8/3/2019 Paper F6 Revision Questions and Answers
78/90
PaPer F6 revision answers December 2011 examinations12
P cu
Answer to example 32
ThemaximumpensioncontributionsTonycanmakearethegreatero
%x=
Hismaximumcontributionsarethereore.Thiswillbepaidneto%taxatsourcei.e.hewillonlypayintohis
pensionundandHMRCwillcontribute.Iheweretocontributemorethanintotheundhewouldonlyreceivetaxrelieasabove
Asheisonlyabasicratetaxpayerthenthereisnoinclusioninhisincometaxcomputation.Youonlyincludethecontribution
iheisahigherratetaxpayerbyextendingthebasicrateandadditionalratebands.
iddul cpl G t
Answer to example 33
November
Proceeds
Less:Cost ()
CapitalGain Less:Capitallossintheyear ()
Less:Annualexemption ()
CGTpayable( W)
Duedate
( W) %
%
Note:Entrepreneursrelieisnotavailableas thisisthedisposalo asingleassetandisnotas partothesaleo thewhole
business.
Answer to example 34
(a) Frederick
Assetisanonwastingchattelcostandproceedsarelessthansoitisexempt.
(b) James
Assetisanonwastingchattelwithcostandproceeds>
i) Normalcalculation
Proceeds Less:Cost ()
Gain
ii) Restriction
5/3[]=
G = 2,500
(c) Sam
Assetisanonwastingchattelwithcost>andproceeds
DeemedProceeds
Less:Cost ()
Capitalloss ()
-
8/3/2019 Paper F6 Revision Questions and Answers
79/90
13PaPer F6 revision answers December 2011 examinations
Answer to example 35
Proceeds
Less:Cost 20 0006 000
6 000 28 000,
,
, ,
+
()
CapitalGain
Answer to example 36Theassetisdamaged-Thisisapartdisposalbutasallotheinsuranceproceedsareusedorrestorationandanelectionis
madetheproceedscanberolledoveragainsttheallowablecostwhentheassetiseventuallysold.
Ju 2011-Nogain
DateodisposalisJunewheninsurancemoneyisreceived.
wh h ully ld:
Proceeds X
Acquisitioncost
Lessinsuranceproceeds ()
()Restorationcosts ()
CapitalGain X
InoelectionhadbeenmadethenacapitalgainwouldhaveariseninJuneasollows:
Proceeds
Cost ,,
, , ,500 000
60 000
60 000 1 000 000
+
()
CapitalGain
Onasubsequentsaletheacquisitioncostwillbe
=Alsoadeductionortherestorationcostscanbemadeo
Answer to example 37
DisposalJanuary
Proceeds
LessAcquisitioncost ()
CapitalGain
Lessgaindeerred(W) ()
ChargeableGain
(w1) Theproceedsarereinvestedbuthaveonlybeenpartiallyreinvested.
Gainchargeablenow=
Proceedsreceived
Lessreplacementasset ()
ChargeableNow
Availabletodeer()
Whenthenewassetissold:
Cost
Less:Gaindeerred ()
Basecost
-
8/3/2019 Paper F6 Revision Questions and Answers
80/90
PaPer F6 revision answers December 2011 examinations14
Answer to example 38
Proceeds
Lesscost2/ ()
CapitalGain
Answer to example 39
Nextdayacquisitions
Matchwiththesharepoolacquisition(s)
sh pl
:bonus
Matchwith()sharesromthesharepool.
Answer to example 40
Gains not qualifying for Entrepreneurs relief
Investmentproperty
LessCapitallossesb(Note) ()
LessAnnualexemption(Note) ()
CGT@%(Note)
Gains qualifying for Entrepreneurs relief
Saleobusiness
Freeholdactory
Goodwill
Warehouse ()
Saleoshares
Gain
CGT@%(Note)
TotalCGT+=
Duedateorpaymenton
Note : Thecapitallossbandtheannualexemptionareosetagainstthegainsnotqualiyingorentrepreneursrelieas
theywillbethesubjecttoahighertaxratethangainsqualiyingorentrepreneursrelie.
Note : AlthoughKithassomeremainingbasicratebandaterhertaxableincomethisisdeemedtohavebeenutilised.by
gainsqualiyingorentrepreneursrelie.
Note : Themaximumgainsonwhichentrepreneursrelieisavailableissoallotheiseligible.The
remaininglietimelimito()isavailableoruturegainsqualiyingorentrepreneurs
relie.
-
8/3/2019 Paper F6 Revision Questions and Answers
81/90
15PaPer F6 revision answers December 2011 examinations
Answer to example 41
March
Proceeds
Less:Cost ()
Lessgainrolledover ()
Chargeablegain()
Basecostotheactory
Cost
Less:Gainrolledover ()
Entrepreneursrelieisnotavailableonthesaleothelandasitwasnotthesaleotheentirebusiness
Answer to example 42
Proceeds(MV )
Less:Cost ()
Less:Gitrelie ()
Chargeablegain()
K
Cost(MV )
Less:Gitrelie ()
Entrepreneursrelieisnotavailableasitwasnotthesaleotheentirebusiness
Answer to example 43
Indexedgain
Less:PPRrelie( W) ()
Less:Lettingrelie( W) ()
Chargeablegain
(W)aul d Dd
oupLg a
years years years
(ElsewhereintheUK+anyotherreason)
(partolastyears)year years
years
years years years years
PPR5/1=
(W) Lettingrelielowero
2
19190 000 25 000
1
2 =, ,
-
8/3/2019 Paper F6 Revision Questions and Answers
82/90
PaPer F6 revision answers December 2011 examinations16
ih t
Answer to example 44
L
) CLT 200,000
LessAnnualexemptions:
2003/04 (3,000)2002/03 b/f (3,000)
194,000
Nilratebandatgit 255,000
Lesschargeabletransersinpreviousyearsromgit
() ()
(255,000)
CoveredbytheNilrateband
) PET 50,000
LessAnnualexemptions:
-used ()
50,000
NolietimetaxonaPET
) PET 175,000
LessMarriageexemption (1,000)
LessAnnualexemptions:
(3,000)
b (3,000)
168,000NolietimetaxonaPET
) CLT 250,000
LessAnnualexemptions:
2009/10 (3,000)
2008/09 bf (3,000)
244,000
Nilratebandatgit 325,000
Lesschargeabletransersinpreviousyearsromgit
() (194,000)
()
IHTat% 28,250
PayablebyJasper
Duedate
Grosschargeabletranser+=
Dh l g
DateodeathFebruary
GitsonoraterFebruary
) November-NoadditionaltaxontheCLT
) December-ThePETisexempt
-
8/3/2019 Paper F6 Revision Questions and Answers
83/90
17PaPer F6 revision answers December 2011 examinations
) PETisnowchargeable
ValueoPETaterexemptions 168,000
Nilratebandatdeath 325,000
Lesschargeabletransersinpreviousyearsromgit
() (194,000)
()
37,000
IHTat% 14,800
Lesstaperrelieyears% (2,960)
IHTpayable 11,840
PayablebyJaspersnephew
Duedateorpayment
) Additional taxonCLT
Grosschargeabletranser 272,250
Nilratebandatdeath 325,000
Lesschargeabletransersinpreviousyearsromgit
(-) (194,000)
(168,000)
272,250
IHTat% 108,900
Lesstaperrelie
-
8/3/2019 Paper F6 Revision Questions and Answers
84/90
PaPer F6 revision answers December 2011 examinations18
cp t
Answer to example 45
YearendedMarch
Tradingprot
InterestReceivable(+)
Less:GitAidpayment ()
TaxableTotalProts
AugmentedProts(+/0)
Corporationtax
%
Less:7/400()29/334,000 ()
Corporationtaxliability
Answer to example 46
Adjustmenttoprotbeoretax
Protbeoretaxperaccounts
Addback
Directorssalary
Depreciation
GitAidpayment
Purchaseovan
Fine
Legalees
Leaseamortisation
Christmaspartyorsta
Politicaldonation
Entertainingcustomers
ExpensesocarusedbyDirector
GoodstakenbyDirector
Less:
Incomeelementoleaseamortisation(note)
Incomeromurnishedlettings
Bankdepositinterest
Dividends
()
Adjustedprot
Note:
() Allowableelementoleaseamortisation
Incomeelement51 21
5042 000 25 200
=, ,
Annualdeduction25 200
211200
, ,=
() Noprivateuseadjustmentsarerequiredbutthedirectormaybesubjecttoabenetcharge.
-
8/3/2019 Paper F6 Revision Questions and Answers
85/90
19PaPer F6 revision answers December 2011 examinations
Answer to example 47
Capitalallowances-yearended
Gl pl ep
(1)
(p u)
spl
pl
sh-l
(1)
all
WDVb
AdditionsQualiyingorAIA
Longlieasset
LessAIA(MAX) ()
AdditionsQualiyingorAIA
Plant
PrintingPress
AIA-used ()
BalancequaliyingorFYA@%
Otheradditions
CarCO
emissionso-gkm
Disposal () ()
()
WDA@% ()
Balancingcharge ()
WDA@% ()
WDA@% ()
AdditionsqualiyingorFYA
Motorcar
-
8/3/2019 Paper F6 Revision Questions and Answers
86/90
PaPer F6 revision answers December 2011 examinations20
Answer to example 50
Matchingrules
) Samedayx
) Previousdays Jan shares
Proceeds2 000
5 00050 000
,
,,
Less: Cost ()
Gain
) -previousdays sharepool
n cidd
Feb
Bonus:
IndextoJulyromFeb157 5 136 3
136 31500
. .
.,
PurchaseJuly
IndextoFeb173 8 157 5
157 55 733
. .
.,
IndextoJan230 0 173 8
173 87 464
. .
.,
Sale () () ()
Proceeds 3 0005 000
50 000,,
,
Less:Cost ()
UnindexedGain
Less:IA() ()
Chargeablegain
Summary
()
()
Totalchargeablegaintoincludeinthecorporationtaxcomputation
Answer to example 51
March
Proceeds
Less:Cost ()
Less:IA% ()
Lessgainrolledover ()
Gainchargednow()
BasecostolandCost
Less:Gainrolledover ()
-
8/3/2019 Paper F6 Revision Questions and Answers
87/90
21PaPer F6 revision answers December 2011 examinations
Answer to example 52
Y dg 31 D
2009 2010 2011
Taxadjustedtradingprot -
Less:Carryorward ()
InterestIncome
Less:Currentyear&carrybackrelie () ()
Less:GitAid ()
TaxableTotalProt Nil Nil
Thegitaidortheyearsendedandarewasted.
Lossmemorandum
Lossye
Less: currentyearye ()
Carrybackye ()
Carryorwardye ()
Answer to example 53
9/1ZLtdslosso=
9/1TLtdsproto=.
th u h 75,000
Theclaimismadebytheclaimantcompany;theconsentothesurrenderingcompanyisrequired.
Answer to example 54
JLtdshouldclaimgrouprelieooryeMarchtoreduceprotstothesmallprotlimit.
KLtdshouldrelieveagainstyeMarchunderthecarrybackprovisionstoreduceprotstothesmallprotlimit.
Thebalanceolossisbestrelievedunderthecarrybackprovisionsasitresultsinanimmediatetaxreund(notethatthegrouprelieclaimismaderstandthebalanceothelossisdealtwithundercurrentandcarrybackrelie ).
Summary
y/ 31/3/2010 y/ 31/3/2011
JLtdTaxableTotalProts
Lessgrouprelie - ()
RevisedTaxableTotalProts
KLtdTaxadjustedtradingprot -
Less:carrybackrelie () -
TaxableTotalProt -
Answer to example 55
tl UK o
TaxableTotalProt ( W)
CorporationTax@%
DTR () ()
DoubletaxationrelieisrestrictedtotheoverseastaxontheoverseasincomeasthisislessthantheUKtaxpayableo.
(W) Rentalincome
Withholdingtaxat%
-
8/3/2019 Paper F6 Revision Questions and Answers
88/90
PaPer F6 revision answers December 2011 examinations22
income tax seLF assessment
Answer to example 56
Paymentsonaccountwillbedueorasollows:
(+ = )
Answer to example 57
Thebalancingpaymentorwillbe:
Totaltaxliability
Less:Paymentsonaccount ()
Balancingpaymentdue
Firstpaymentonaccountor
(+)=
TotaldueJanuary=
income tax PaYe coDinGAnswer to example 58
Allowances
Personalallowance
PPP(paidnetoBRT )
Expensedeductions
Less: Deductions
Benets
Untaxedincome Taxunderpaymentsb(/0)
Maureenscodeor L
corPoration tax seLF assessment
Answer to example 59
Corporationtax=@%=
Asthecompanyislargethecorporationtaxisdueorinstalments.
yeM arch ()
October
January
April
July
ThecompanyhasalingdateoMarchorthecorporationtaxcomputationyeMarch.
-
8/3/2019 Paper F6 Revision Questions and Answers
89/90
23PaPer F6 revision answers December 2011 examinations
vat
Answer to example 60
Taxableturnoverinrstmonthswas()+().
Thepositionthereateris:
E nd o Jun e + =
End oJuly + =
E ndo Au gu st + = YRLtdexceedsthethresholdattheendAugust.
NotiyHMRCbySeptember.RegistrationiseectiveromOctober.
Answer to example 61
FromJunetoMarchthevalueoDolphinLtdstaxablesupplieswas.
Soitisnotyetrequiredtoregisterusingthehistoricaltest.
Butusingtheuturetestonthecompanyexpectsitstaxablesuppliesinthenextdaystoexceed.
ItisrequiredtoregisterimmediatelyieromApril.
NotiyHMRCbyMay.
Answer to example 62
oupu vat
(%)%
ipu vat
Standardratedpurchases[ , , ]61250 2 25020
120
()
Irrecoverabledebts7 87520
120, (Note) ()
(>monthsold)
Machine11750 20120
, ()
VATPayableJuly
Note: NoVATrecoveryoncustomerentertainingorcarswithanyprivateuse.
Answer to example 63
a) Withoutusingthefatratescheme
OutputVAT 70 50020
120,
InputVAT1175020
120, ()
VATpayable
b ) Us in g fa t rate s che me
%=
Usingtheschemesaves()inyeJuneandtheVATadministrationissimplied.
Answer to example 64
Qu Du sud cqu
Surcharg eliabilitynoticeiss ued.Periodonoticeuntil June
Butpayment
Firstdeaultinnoticeperiod.Surchargepenalty%=.
AlsonoticeperiodextendedtoDecember
-
8/3/2019 Paper F6 Revision Questions and Answers
90/90
PaPer F6 revision answers December 2011 examinations24
Answer to example 65
th dg gup vat g :
NoVATisaccountedorontransactionsbetweengroupmemberswithintheVATgroup
OnlyoneVATreturnissubmittedorthegroup;thereoreanadministrativeadvantage.
Thegroupcanchoosewhichcompaniestoincludeorexclude(benecialtoexcludeazeroratedcompany)
th ddg gup vat g :
ThelimitsorCashandAnnualAccountingschemeswillapplytothegroupasawholeandnotonanindividualcompany
basis. Jointandseveralliabilityoeachcompanyinthegroup
Possibleadministrationissuescollectinginormationtobepassedontotherepresentativemember.
TwoormorecompaniescanregisterasagrouporVATpurposes.Theymustbeundercommoncontroloathirdcompany
andresidentintheUK
ThegroupistreatedorVATpurposesasiitwereasinglecompanyregisteredorVATonitsown.
Arepresentativememberothegroupisappointedandthiscompanyisresponsibleorcompletingandsubmittingasingle
VATreturnandpayingtheVATonbehalothegroup.
AllcompaniesintheVATgrouparejointlyandseverallyliableoranyVATliabilitiesothegroup.
Answer to example 66
TheexportstoaNewZealandbusinesscustomerwillbezeroratedasitisanexportogoodstoanonEUcountry ThedispatchtoGermannonbusinesscustomerwillbestandardratedsooutputVATwillbe%=
TheimportoogoodsromanAustralianbusinesssupplieswillresultinMarsLtdpayingVAT@%ie
%=toHMRCatpointoentryintotheUK.(ThisisassumingthatMarsLtddoesnotusethedutydeerment
scheme).ThiscanbethenrecoveredasinputVAT.
TheacquisitionogoodsvaluedatromabusinesssupplierinFrancewillresultinMarsLtdaccountingoroutput
VATo%=asasel-supply.TheselsupplyoutputVATocanalsoberecoveredasinputVAT.
Qu 30 Ju 2011
vat u
oupu vat
ExportogoodstoEUnonbusinesscustomer%
SelsupplyonacquisitionromEUsupplier%
ipu vat
ImportogoodsromnonEUsupplier% ()
SelsupplyonacquisitionromEUsupplier% ()