我是北京物资学院的，目前想报考ACCA考试，听...

正确答案：
(b) Report to the management of Razor Ltd
To           The management of Razor Ltd
From       Tax advisers
Date         6 June 2007
Subject    The proposed activities of Cutlass Inc
(i) Rate of tax on profits of Cutlass Inc
When considering the manner in which the profits of Cutlass Inc will be taxed it must be recognised that the system of
corporation tax in Sharpenia is the same as that in the UK.
The profits of Cutlass Inc will be subject to corporation tax in the country in which it is resident or where it has a
permanent establishment. It is desirable for the profits of Cutlass Inc to be taxed in the UK rather than in Sharpenia as
the rate of corporation tax in the UK on annual profits of ￡120,000 will be 19% whereas in Sharpenia the rate of tax
would be 38%.
Residency of Cutlass Inc
Cutlass Inc will be resident in Sharpenia, because it is incorporated there. However, it will also be resident in the UK if
it is centrally managed and controlled from the UK. For this to be the case, Amy and Ben should hold the company’s
board meetings in the UK.
Under the double tax treaty between the UK and Sharpenia, a company resident in both countries is treated as being
resident in the country where it is effectively managed and controlled. For Cutlass Inc to be treated as UK resident under
the treaty, Amy and Ben would need to ensure that all key management and commercial decisions are made in the UK
and not in Sharpenia.
Permanent establishment
A permanent establishment is a fixed place of business, including an office, factory or workshop, through which the
business of an enterprise is carried on. A permanent establishment will also exist in a country if contracts in the
company’s name are habitually concluded there.
The trading profits of Cutlass Inc will be taxable in Sharpenia if they are derived from a permanent establishment in
Sharpenia even if it can be established that Cutlass Inc is UK resident under the double tax treaty.
Double taxation
If Cutlass Inc is UK resident but has a permanent establishment in Sharpenia, its trading profits will be subject to
corporation tax in both the UK and Sharpenia with double tax relief available in the UK. The double tax relief will be the
lower of the UK tax and the Sharpenian tax on the trading profits. Accordingly, as the rate of tax is higher in Sharpenia
than it is in the UK, there will be no UK tax to pay on the company’s trading profits and the rate of tax on the profits
would be the rate in Sharpenia, i.e. 38%.
If Cutlass Inc is UK resident and does not have a permanent establishment in Sharpenia, its profits will be taxable in
the UK at the rate of 19% and not in Sharpenia.

正确答案：
(ii) Exercising of share options
The share option is not part of an approved scheme, and will not therefore enjoy the benefits of such a scheme. There
are three events with tax consequences – grant, exercise and sale.
Grant. If shares or options over shares are sold or granted at less than market value, an income tax charge can arise on
the difference between the price paid and the market value. [Weight v Salmon]. In addition, if options can be exercised
more than 10 years after the date of the grant, an employment income charge can arise. This is based on the market
value at the date of grant less the grant and exercise priced.
In Henry’s case, the options were issued with an exercise price equal to the then market value, and cannot be exercised
more than 10 years from the grant. No income tax charge therefore arises on grant.
Exercise. On exercise, the individual pays the agreed amount in return for a number of shares in the company. The price
paid is compared with the open market value at that time, and if less, the difference is charged to income tax. National
insurance also applies, and the company has to pay Class 1 NIC. If the company and shareholder agree, the national
insurance can be passed onto the individual, and the liability becomes a deductible expense in calculating the income
tax charge.
In Henry’s case on exercise, the difference between market value (￡14) and the price paid (￡1) per share will be taxed
as income. Therefore, ￡130,000 (10,000 x (￡14 – ￡1)) will be taxed as income. In addition, national insurance will
be chargeable on the company at 12·8% (￡16,640) and on Henry at the rate of 1% (￡1,300).
Sale. The base cost of the shares is taken to be the market value at the time of exercise. On the sale of the shares, any
gain or loss arising falls under the capital gains tax rules, and CGT will be payable on any gain. Business asset taper
relief will be available as the company is an unquoted trading company, but the relief will only run from the time that
the share options are exercised – i.e. from the time when the shares were acquired.
In Henry’s case, the sale of the shares will immediately follow the exercise of the option (6 days later). The sale proceeds
and the market value at the time of exercise are likely to be similar; thus little to no gain is likely to arise.

正确答案：
(c) The advantage to a company of keeping its working capital cycle short is that fewer resources are tied up in working capital,
thus freeing them for other purposes.
(Other answers considered on their merits)

正确答案：A