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Assume that the Finance Act 2020 rates and allowances as set out in the ICAEW Learning Materials for exams in 2021 will continue to apply in ...
Typology: Exercises
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This exam consists of five questions ( marks). Marks breakdown Question 1 7 marks Question 2 13 marks Question 3 25 marks Question 4 20 marks Question 5 35 marks Assume that the Finance Act 2020 rates and allowances as set out in the ICAEW Learning Materials for exams in 2021 will continue to apply in 2020/21 and future years unless you are specifically instructed otherwise. The relevant Hardman's Tax Rates and Tables book is available as a resource in each question.
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Question 2 Nadia started a restaurant business in April 2020 , registering for VAT immediately. On 30 April 202 0 , Nadia was granted a 10-year lease of restaurant premises in Birmingham. The owner of the premises opted to tax the building. Nadia paid a premium of £200,000 and the rent is £16,000 per year. Both amounts are stated exclusive of any VAT. Nadia was four months late submitting a land transaction form. She forgot to include the stamp duty land tax (SDLT) on the lease premium, or to pay any SDLT. As soon as she realised her mistake, Nadia corrected the submission and she paid all of the SDLT, five months after it was due. Both the delay and the omission occurred because Nadia was very busy with her restaurant. Nadia's restaurant makes freshly-cooked food, prepared to order, which is then served to customers at tables inside the premises. Requirements
Question 3. Fola, who is UK resident and domiciled, made two disposals of assets during 2020/21. In January 2009, Fola bought 500 shares in Vrist plc for £12 per share (a shareholding of less than 1%). In February 2012, Vrist plc made a 1-for-5 bonus issue. In June 2016, Fola took up a 1-for-3 rights issue at £35 per share. In June 2020, Fola gave all the Vrist plc shares to her daughter. On the date of the gift, Vrist plc shares were quoted at 2400p to 2656p, with marked bargains of 2440p, 2560p and 2600p. In July 2020, Fola sold a house that she had never lived in. The house cost £18 7 ,000 in 2014 and was sold for its market value of £23 7 ,000. In 2020/21 Fola had employment income of £32,500 and bank interest of £2,000. Requirement Calculate Fola's capital gains tax payable for 2020/21. ( 10 marks) Question 3. Sam died on 5 April 2021. He was UK resident and domiciled all his life. Sam’s lifetime transfers were: June 2013 A gross chargeable transfer of £315, August 2016 A cash gift of £ 2 2,000 to his son as a wedding gift May 2020 A gift of 1,600 Rotarc plc shares (a shareholding of less than 1%) to his son. On the date of the gift, Rotarc plc shares were quoted at 12 00p to 1328 p, with marked bargains of 1220 , 1280 and 13 00p. On 5 April 2021, Rotarc plc shares were quoted at 1225 p to 1385 p, with marked bargains of 1260p, 1321p and 1368 p. Sam's assets and liabilities at the date of his death were:
2022 : new subsidiary Entwicz Ltd will buy a subsidiary company next year. Entwicz Ltd's directors would like your firm of ICAEW Chartered Accountants to prepare the subsidiary's corporation tax returns from 2022 onwards. Requirements
Question 5. Stooj Partners Larry, Moe and Shemp traded in partnership as Stooj Partners for many years. Annual salaries were taken by Moe and Shemp only, of £6,000 and £18,000, respectively. Remaining profits were shared equally between all three partners. Recent partnership profits were: £ Year ended 31 December 2019 66, Year ended 31 December 2020 1 5,0 00 Overlap profits brought forward were: £ Larry 525 Moe 750 Shemp 1, Shemp left the partnership on 31 December 2020. Shemp During 2020/21, Shemp received the following income: