(c) Assuming that Stuart:(i) purchased 201,000 shares in Omega plc on 3 December 2005; and(ii) dies on 20 December 2007,calculate the potential inheritance tax (IHT) liability which would arise if Rebecca were to die on 1 March2008, and no further tax planning measures were taken.Assume that all asset values remain unchanged and that the current rates of inheritance tax continue toapply. (6 marks)

考题 (b) Assuming that Thai Curry Ltd claims relief for its trading loss against total profits under s.393A ICTA 1988,calculate the company’s corporation tax liability for the year ended 30 September 2005. (10 marks)

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考题 (c) (i) State the date by which Thai Curry Ltd’s self-assessment corporation tax return for the year ended30 September 2005 should be submitted, and advise the company of the penalties that will be due ifthe return is not submitted until 31 May 2007. (3 marks)(ii) State the date by which Thai Curry Ltd’s corporation tax liability for the year ended 30 September 2005should be paid, and advise the company of the interest that will be due if the liability is not paid until31 May 2007. (3 marks)

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考题 (d) The management of Wonderland plc have become concerned about the increased level of operating costsassociated with its petrol-driven ferries and have made a strategic decision to dispose of these. They are nowconsidering entering into a contract with the Newman Steamship Company (NSC), a shipping organisation basedin Robynland. The contract would entail NSC providing transport to and from Cinola Island for all visitors to thezoo and circus.As a result of negotiations with NSC, the directors of Wonderland plc are considering two options whereby NSCwill become responsible for the transportation of visitors to and from Cinola Island with effect from 1 December2007 or 1 December 2008.Additional information is available as follows:(1) NSC would require Wonderland plc to pay for the necessary modifications to their steamships in order thatthey would satisfy marine regulations with regard to passenger transportation. The only firm which couldundertake this work is currently working to full capacity and would require a payment of ￡2,450,000 inorder to undertake the work necessary so that the ferries could be in operation by 1 December 2007. Thesame firm would require a payment of ￡1,725,000 in order to make the necessary modifications so thatthe ferries could be in operation by 1 December 2008. The government of Robynland would be willing topay a grant of 8% towards the cost of getting the ferries into operation by 1 December 2007, but would notbe willing to pay a grant in respect of any later date.(2) On 1 December 2002 Wonderland plc paid ￡500,000 to the Port Licencing Authority of Robynland. Thispayment was for a licence which entitles Wonderland plc to use all harbour facilities in Robynland duringthe five-year period ending 30 November 2007. The licence could be renewed on 1 December 2007 at acost of ￡150,000 per annum.(3) Redundancy payments would need to be paid in respect of loss of employment. These would amount to￡1,200,000 if the contract with NSC commenced on 1 December 2007. This amount would reduce to￡750,000 if the contract commenced on 1 December 2008.(4) Wonderland plc has a contract for the provision of petrol for its ferries which is due to expire on 30 November2008. Early termination of the contract would incur a penalty charge of ￡76,000. An emergency reservestock of petrol held by Wonderland plc, which cannot be used after 30 November 2007 due to marineregulations regarding the age of fuel, could be sold for ￡55,000 on 1 December 2007 but not on any datethereafter.(5) The ferries could be sold for ￡3,300,000 on 1 December 2007. If retained after 1 December 2007 theferries would require servicing during the year ending 30 November 2008 which would incur costsamounting to ￡150,000. The resale value of the ferries on 1 December 2008 would be ￡2,900,000.(6) Stock of consumable items which originally cost ￡150,000 could be sold on 1 December 2007 for￡110,000 and on 1 December 2008 for ￡50,000.Required:(i) On purely financial grounds, advise whether the management of Wonderland plc should enter into acontract with NSC with effect from 1 December 2007 or 1 December 2008. You may ignore the timevalue of money. (9 marks)

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考题 (d) Advise on any lifetime inheritance tax (IHT) planning that could be undertaken in respect of both Stuart andRebecca to help reduce the potential inheritance tax (IHT) liability calculated in (c) above. (7 marks)Relevant retail price index figures are:May 1994 144·7April 1998 162·6

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考题 (b) Explain the capital gains tax (CGT) and inheritance tax (IHT) implications of Graeme gifting his remaining ‘T’ordinary shares at their current value either:(i) to his wife, Catherine; or(ii) to his son, Barry.Your answer should be supported by relevant calculations and clearly identify the availability and effect ofany reliefs (other than the CGT annual exemption) that might be used to reduce or defer any tax liabilitiesarising. (9 marks)

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考题 (c) Assuming that Joanne registers for value added tax (VAT) with effect from 1 April 2006:(i) Calculate her income tax (IT) and capital gains tax (CGT) payable for the year of assessment 2005/06.You are not required to calculate any national insurance liabilities in this sub-part. (6 marks)

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考题 (ii) State, giving reasons, the tax reliefs in relation to inheritance tax (IHT) and capital gains tax (CGT) whichwould be available to Alasdair if he acquires the warehouse and leases it to Gallus Co, rather than toan unconnected tenant. (4 marks)

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考题 (b) (i) Calculate the inheritance tax (IHT) that will be payable if Debbie were to die today (8 June 2005).Assume that no tax planning measures are taken and that there has been no change in the value of anyof the assets since David’s death. (4 marks)

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考题 (ii) State when the inheritance tax (IHT) calculated in (i) would be payable and by whom. (2 marks)

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考题 (b) Mabel has two objectives when making the gifts to Bruce and Padma:(1) To pay no tax on any gift in her lifetime; and(2) To reduce the eventual liability to inheritance tax on her death.Advise Mabel which item to gift to Bruce and to Padma in order to satisfy her objectives. Give reasons foryour advice.Your advice should include a computation of the inheritance tax saved as a result of the two gifts, on theassumption that Mabel dies on 30 June 2011. (10 marks)

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考题 (c) Without changing the advice you have given in (b), or varying the terms of Luke’s will, explain how Mabelcould further reduce her eventual inheritance tax liability and quantify the tax saving that could be made.(3 marks)The increase in the retail prices index from April 1984 to April 1998 is 84%.You should assume that the rates and allowances for the tax year 2005/06 will continue to apply for theforeseeable future.

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考题 (d) Explain how Gloria would be taxed in the UK on the dividends paid by Bubble Inc and the capital gains taxand inheritance tax implications of a future disposal of the shares. Clearly state, giving reasons, whether ornot the payment made to Eric is allowable for capital gains tax purposes. (9 marks)You should assume that the rates and allowances for the tax year 2005/06 apply throughout this question.

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考题 (b) Calculate the inheritance tax (IHT) liability arising as a result of Christopher’s death. (11 marks)

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考题 (ii) Assuming the relief in (i) is available, advise Sharon on the maximum amount of cash she could receiveon incorporation, without triggering a capital gains tax (CGT) liability. (3 marks)

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考题 (ii) Calculate Paul’s tax liability if he exercises the share options in Memphis plc and subsequently sells theshares in Memphis plc immediately, as proposed, and show how he may reduce this tax liability.(4 marks)

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考题 (c) Explain the capital gains tax (CGT) and income tax (IT) issues Paul and Sharon should consider in decidingwhich form. of trust to set up for Gisella and Gavin. You are not required to consider inheritance tax (IHT) orstamp duty land tax (SDLT) issues. (10 marks)You should assume that the tax rates and allowances for the tax year 2005/06 apply throughout this question.

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考题 (ii) Assuming the new structure is implemented with effect from 1 August 2006, calculate the level ofmanagement charge that should be made by Bold plc to Linden Limited for the year ended 31 July2007, so as to minimise the group’s overall corporation tax (CT) liability for that year. (2 marks)

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考题 (b) For this part, assume today’s date is 1 May 2010.Bill and Ben decided not to sell their company, and instead expanded the business themselves. Ben, however,is now pursuing other interests, and is no longer involved with the day to day activities of Flower Limited. Billbelieves that the company would be better off without Ben as a voting shareholder, and wishes to buy Ben’sshares. However, Bill does not have sufficient funds to buy the shares himself, and so is wondering if thecompany could acquire the shares instead.The proposed price for Ben’s shares would be ￡500,000. Both Bill and Ben pay income tax at the higher rate.Required:Write a letter to Ben:(1) stating the income tax (IT) and/or capital gains tax (CGT) implications for Ben if Flower Limited were torepurchase his 50% holding of ordinary shares, immediately in May 2010; and(2) advising him of any available planning options that might improve this tax position. Clearly explain anyconditions which must be satisfied and quantify the tax savings which may result.(13 marks)Assume that the corporation tax rates for the financial year 2005 and the income tax rates and allowancesfor the tax year 2005/06 apply throughout this question.

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考题 (ii) Advise Andrew of the tax implications arising from the disposal of the 7% Government Stock, clearlyidentifying the tax year in which any liability will arise and how it will be paid. (3 marks)

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考题 1 Alvaro Pelorus is 47 years old and married to Maria. The couple have two children, Vito and Sophie, aged 22 and19 years respectively. Alvaro and Maria have lived in the country of Koruba since 1982. On 1 July 2005 the familymoved to the UK to be near Alvaro’s father, Ray, who was very ill. Alvaro and Maria are UK resident, but not ordinarilyresident in the tax years 2005/06 and 2006/07. They are both domiciled in the country of Koruba.On 1 February 2007 Ray Pelorus died. He was UK domiciled, having lived in the UK for the whole of his life. For thepurposes of inheritance tax, his death estate consisted of UK assets, valued at ￡870,000 after deduction of allavailable reliefs, and a house in the country of Pacifica valued at ￡94,000. The executors of Ray’s estate have paidPacifican inheritance tax of ￡1,800 and legal fees of ￡7,700 in respect of the sale of the Pacifican house. Ray leftthe whole of his estate to Alvaro.Ray had made two gifts during his lifetime:(i) 1 May 2003: He gave Alvaro 95 acres of farm land situated in the UK. The market value of the land was￡245,000, although its agricultural value was only ￡120,000. Ray had acquired the land on1 January 1996 and granted an agricultural tenancy on that date. Alvaro continues to own theland as at today’s date and it is still subject to the agricultural tenancy.(ii) 1 August 2005: He gave Alvaro 6,000 shares valued at ￡183,000 in Pinger Ltd, a UK resident tradingcompany. Gift relief was claimed in respect of this gift. Ray had acquired 14,000 shares inPinger Ltd on 1 April 1997 for ￡54,600.You may assume that Alvaro is a higher rate taxpayer for the tax years 2005/06 and 2006/07. In 2006/07 he madethe following disposals of assets:(i) On 1 July 2006 he sold the 6,000 shares in Pinger Ltd for ￡228,000.(ii) On 1 September 2006 he sold 2,350 shares in Lapis Inc, a company resident in Koruba, for ￡8,270. Alvarohad purchased 5,500 shares in the company on 1 September 2002 for ￡25,950.(iii) On 1 December 2006 he transferred shares with a market value of ￡74,000 in Quad plc, a UK quoted company,to a UK resident discretionary trust for the benefit of Vito and Sophie. Alvaro had purchased these shares on1 January 2006 for ￡59,500.Alvaro has not made any other transfers of value for the purposes of UK inheritance tax. He owns the family housein the UK as well as shares in UK and Koruban companies and commercial rental property in the country of Koruba.Maria has not made any transfers of value for the purposes of UK inheritance tax. Her only significant asset is thefamily home in the country of Koruba.Alvaro and his family expect to return to their home in the country of Koruba in October 2007 once Ray’s affairs havebeen settled. There is no double taxation agreement between the UK and Koruba.Required:(a) Calculate the inheritance tax (IHT) payable as a result of the death of Ray Pelorus. Explain the availabilityor otherwise of agricultural property relief and business property relief on the two lifetime gifts made by Ray.(8 marks)

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考题 (c) (i) Explain the inheritance tax (IHT) implications and benefits of Alvaro Pelorus varying the terms of hisfather’s will such that part of Ray Pelorus’s estate is left to Vito and Sophie. State the date by which adeed of variation would need to be made in order for it to be valid; (3 marks)

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考题 5 (a) Carver Ltd was incorporated and began trading in August 2002. It is a close company with no associatedcompanies. It has always prepared accounts to 31 December and will continue to do so in the future.It has been decided that Carver Ltd will sell its business as a going concern to Blade Ltd, an unconnectedcompany, on 31 July 2007. Its premises and goodwill will be sold for ￡2,135,000 and ￡290,000 respectivelyand its machinery and equipment for ￡187,000. The premises, which do not constitute an industrial building,were acquired on 1 August 2002 for ￡1,808,000 and the goodwill has been generated internally by thecompany. The machinery and equipment cost ￡294,000; no one item will be sold for more than its original cost.The tax adjusted trading profit of Carver Ltd in 2007, before taking account of both capital allowances and thesale of the business assets, is expected to be ￡81,000. The balance on the plant and machinery pool for thepurposes of capital allowances as at 31 December 2006 was ￡231,500. Machinery costing ￡38,000 waspurchased on 1 March 2007. Carver Ltd is classified as a small company for the purposes of capital allowances.On 1 August 2007, the proceeds from the sale of the business will be invested in either an office building or aportfolio of UK quoted company shares, as follows:Office buildingThe office building would be acquired for ￡3,100,000; the vendor is not registered for value added tax (VAT).Carver Ltd would borrow the additional funds required from a UK bank. The building is let to a number ofcommercial tenants who are not connected with Carver Ltd and will pay rent, in total, of ￡54,000 per calendarquarter, in advance, commencing on 1 August 2007. The company’s expenditure for the period from 1 August2007 to 31 December 2007 is expected to be:￡Loan interest payable to UK bank 16,000Building maintenance costs 7,500Share portfolioShares would be purchased for the amount of the proceeds from the sale of the business with no need for furtherloan finance. It is estimated that the share portfolio would generate dividends of ￡36,000 and capital gains, afterindexation allowance, of ￡10,000 in the period from 1 August 2007 to 31 December 2007.All figures are stated exclusive of value added tax (VAT).Required:(i) Taking account of the proposed sale of the business on 31 July 2007, state with reasons the date(s) onwhich Carver Ltd must submit its corporation tax return(s) for the year ending 31 December 2007.(2 marks)

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考题 5 Crusoe has contacted you following the death of his father, Noland. Crusoe has inherited the whole of his father’sestate and is seeking advice on his father’s capital gains tax position and the payment of inheritance tax following hisdeath.The following information has been extracted from client files and from telephone conversations with Crusoe.Noland – personal information:– Divorcee whose only other relatives are his sister, Avril, and two grandchildren.– Died suddenly on 1 October 2007 without having made a will.– Under the laws of intestacy, the whole of his estate passes to Crusoe.Noland – income tax and capital gains tax:– Has been a basic rate taxpayer since the tax year 2000/01.– Sales of quoted shares resulted in:– Chargeable gains of ￡7,100 and allowable losses of ￡17,800 in the tax year 2007/08.– Chargeable gains of approximately ￡14,000 each tax year from 2000/01 to 2006/07.– None of the shares were held for long enough to qualify for taper relief.Noland – gifts made during lifetime:– On 1 December 1999 Noland gave his house to Crusoe.– Crusoe has allowed Noland to continue living in the house and has charged him rent of ￡120 per monthsince 1 December 1999. The market rent for the house would be ￡740 per month.– The house was worth ￡240,000 at the time of the gift and ￡310,000 on 1 October 2007.– On 1 November 2004 Noland transferred quoted shares worth ￡232,000 to a discretionary trust for the benefitof his grandchildren.Noland – probate values of assets held at death: ￡– Portfolio of quoted shares 370,000Shares in Kurb Ltd 38,400Chattels and cash 22,300Domestic liabilities including income tax payable (1,900)– It should be assumed that these values will not change for the foreseeable future.Kurb Ltd:– Unquoted trading company– Noland purchased the shares on 1 December 2005.Crusoe:– Long-standing personal tax client of your firm.– Married with two young children.– Successful investment banker with very high net worth.– Intends to gift the portfolio of quoted shares inherited from Noland to his aunt, Avril, who has very little personalwealth.Required:(a) Prepare explanatory notes together with relevant supporting calculations in order to quantify the tax reliefpotentially available in respect of Noland’s capital losses realised in 2007/08. (4 marks)

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考题 (ii) Explain why Galileo is able to pay the inheritance tax due in instalments, state when the instalments aredue and identify any further issues relevant to Galileo relating to the payments. (3 marks)

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考题 1 Stuart is a self-employed business consultant aged 58. He is married to Rebecca, aged 55. They have one child,Sam, who is aged 24 and single.In November 2005 Stuart sold a house in Plymouth for ￡422,100. Stuart had inherited the house on the death ofhis mother on 1 May 1994 when it had a probate value of ￡185,000. The subsequent pattern of occupation was asfollows:1 May 1994 to 28 February 1995 occupied by Stuart and Rebecca as main residence1 March 1995 to 31 December 1998 unoccupied1 January 1999 to 31 March 2001 let out (unfurnished)1 April 2001 to 30 November 2001 occupied by Stuart and Rebecca1 December 2001 to 30 November 2005 used occasionally as second homeBoth Stuart and Rebecca had lived in London from March 1995 onwards. On 1 March 2001 Stuart and Rebeccabought a house in London in their joint names. On 1 January 2002 they elected for their London house to be theirprincipal private residence with effect from that date, up until that point the Plymouth property had been their principalprivate residence.No other capital disposals were made by Stuart in the tax year 2005/06. He has ￡29,500 of capital losses broughtforward from previous years.Stuart intends to invest the gross sale proceeds from the sale of the Plymouth house, and is considering twoinvestment options, both of which he believes will provide equal risk and returns. These are as follows:(1) acquiring shares in Omikron plc; or(2) acquiring further shares in Omega plc.Notes:1. Omikron plc is a listed UK trading company, with 50,250,000 shares in issue. Its shares currently trade at 42pper share.2. Stuart and Rebecca helped start up the company, which was then Omega Ltd. The company was formed on1 June 1990, when they each bought 24,000 shares for ￡1 per share. The company became listed on 1 May1997. On this date their holding was subdivided, with each of them receiving 100 shares in Omega plc for eachshare held in Omega Ltd. The issued share capital of Omega plc is currently 10,000,000 shares. The share priceis quoted at 208p – 216p with marked bargains at 207p, 211p, and 215p.Stuart and Rebecca’s assets (following the sale of the Plymouth house but before any investment of the proceeds) areas follows:Assets Stuart Rebecca￡￡Family house in London 450,000 450,000Cash from property sale 422,100 –Cash deposits 165,000 165,000Portfolio of quoted investments – 250,000Shares in Omega plc see above see aboveLife insurance policy note 1 note 1Note:1. The life insurance policy will pay out a sum of ￡200,000 on the death of the first spouse to die.Stuart has recently been diagnosed with a serious illness. He is expected to live for another two or three years only.He is concerned about the possible inheritance tax that will arise on his death. Both he and Rebecca have wills whoseterms transfer all assets to the surviving spouse. Rebecca is in good health.Neither Stuart nor Rebecca has made any previous chargeable lifetime transfers for the purposes of inheritance tax.Required:(a) Calculate the taxable capital gain on the sale of the Plymouth house in November 2005 (9 marks)

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考题 (b) Given his recent diagnosis, advise Stuart as to which of the two proposed investments (Omikron plc/Omegaplc) would be the more tax efficient alternative. Give reasons for your choice. (3 marks)

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考题 (c) (i) Calculate Benny’s capital gains tax liability for 2006/07. (6 marks)

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