Accounting Assignment Help

Accounting Assignment Help 

Q1- During the year ended 31 March 2021 BTM Ltd disposed of an asset that resulted in a capital loss of £35,000. SMS Ltd, the 100% subsidiary of BTM Ltd, disposed of an asset that resulted in a capital gain of £100,000.

BTM Ltd has Taxable Total Profits of £1M and SMS Ltd has Taxable Total Profits of

£800,000 including the chargeable gain and anticipates larger profits in the next accounting period. BTM Ltd holds no other shareholdings.

Requirement:

Discuss the elections available to the group companies and how they may best be used.

 

Q2- Anis owns 60% of the shares in AMX Ltd an unquoted trading company. AMX Ltd has 200,000 £1 ordinary shares in issue all of which were subscribed for at par by the existing shareholders in 2004, from which date Anis has been the managing director of the company.

Share valuations have now been agreed as follows:

20% £10 per share 40% £15 per share 60% £25 per share 80% £40 per share Requirement:

Advise Anis on ALL tax implications of gifting 40,000 of his shares to his daughter Mia (support your advice with calculations where possible).

 

Q3. Joseph Leat is 30 years old. He is employed by Totton Media plc as a computer technician, and he is also self-employed as a satellite technician. Joseph has tried to prepare his income tax computation for the tax year 2020–21. Although he has correctly done part of his income tax computation, he could not fully complete it and there are a significant number of missing values. These missing values are marked as outstanding (O/S). The partly completed income tax computation is as follows:

Joseph Leat – Income tax computation 2020–21

                        Note    £          £         

            Trading profit           1                      O/S     

            Employment income                                               

            Salary             35,000                       

            car benefit     2          O/S                 

            Fuel benefit   2          O/S                 

            Accommodation       3          O/S                 

                                                O/S     

            Property business profit      4                      O/S     

            Bank interest                         2,500 

            Dividends      5                      8,000 

            Personal allowance                          (12,500)        

            Taxable income                                O/S     

            Income Tax 37,500 at 20%

O/S at 40%

O/S at 45%

O/S                             

7,500

O/S O/S         

            Income tax liability                          O/S     

 

            Tax deducted at source                                          

            PAYE                         5,789 

            Income tax payable                          O/S     

 

Note 1 – Trading profit

Joseph has commenced his self-employment on 1st January 2020. His tax adjusted trading profit for the four-month period ended 30th April 2020 was £16,500, while tax adjusted trading profit for the year ended 30th April 2021 was £49,200. These figures are before taking account of capital allowances. The only item of plant and machinery owned by Joseph is his motor car, which cost £25,000 on 1 September 2020. The motor car has a CO2 emission rate of 110 grams per kilometre, and 20% of the mileage driven by Joseph is for private journeys.

 

Note 2 – Car and fuel benefits

Over the tax year 2020–21, Totton Media plc has provided Joseph with a diesel- powered van which has a list price of £25,000. The van cost Totton Media plc £20,000, and it has a CO2 emission rate of 94 grams per kilometre. During the tax year 2020– 21, Joseph made contributions of £2,400 to Totton Media plc for the use of the van.

During the period 1st October 2020 to 5th April 2021, Totton Media plc also has provided Joseph with fuel for private journeys. The total cost of fuel during the period 1st October 2020 to 5th April 2021 was £2,800, of which 60% was for private journeys. Joseph did not make any contributions towards the cost of the fuel.

 

Note 3 – Accommodation

During the tax year 2020–21, Totton Media plc has provided Joseph with living accommodation. The property has been purchased by Totton plc since 6th April 2016 at a cost of £199,000. The property market value on 6th April 2020 was £250,000, and it has an annual value of £13,000 (assuming that official rate of interest is 2.5%).

On 6th April 2020, Totton plc purchased furniture for the property at a cost of £18,000. The company pays for the running costs relating to the property, and for the tax year 2020–21 these amounted to £7,000.

Note 4 – Property business profit

Joseph owns an office which has been let out unfurnished. The office was purchased on 1st October 2020, and during October 2020, Joseph spent £10,000 replacing the building’s floor. The office could not be used until this repair was carried out. During November 2020, Joseph has spent£500 on advertising the office for rent.

On 1st January 2021, the office was let to a tenant, with Joseph receiving a premium of

£60,000 for the grant of a 10-year lease. The monthly rent is £600 payable in advance, and during the period 1st January 2021 to 5th April 2021, Joseph received four rental payments.

Due to a fire, £10,600 was spent on replacing the roof of the shop during February 2021. Only £7,000 of this was paid for by his insurance company.

Joseph paidinsurance of £900 in respect of the office. This waspaid on 1st October 2020 and is for the year ended 30th September 2021.

Note 5 - Dividends

Joseph has not considered his eligibility for dividend allowance for the tax year 2020– 21.

Other information

-           Capital gains

On 4th April 2020, Joseph sold 6,000 £1 ordinary shares in HKNS  plc for £41,700.  He has had the following transactions in the shares of the company:

 

1st March 2007        Purchased 10,000 shares for £9,900. 20th July 2011    Purchased 4,000 shares for £13,900. 23rd October 2019          Offered a gift of 2,000 shares.

 

The gift of 2,000 shares on 23rd October 2019 was to Joseph’s brother. On that date, the shares were quoted on the Stock Exchange at £2.90–£3.10. There were no recorded bargains. Holdover relief is not available in respect of this disposal.

Neither disposal of HKNS plc shares during the tax year 2019–20 qualifies for entrepreneurs’ relief.

For the tax year 2019–20, Joseph is a higher rate taxpayer, and expected to remain so for the tax year 2020–21. Joseph regularly makes disposals of other investments, so no annual exempt amount is available for either of the tax years 2019–20 or 2020–21.

Required:

1-        Calculate the income tax payable by Joseph Le at for the tax year 2020–21.

2-        Calculate the chargeable gains arising from Joseph’s disposal of HKNS plc shares during the tax year 2019-20.          

3-        State why it would have been beneficial if Joseph has delayed the sale of the 6,000 shares in HKNS plc until 6th April 2020.

 

Q4- An trobus Limited had the following transactions in the quarter to 30th June 2020:

Sales:  £

Standard- rated supplies (excluding VAT).         150,000

Zero- rated supplies 50,000

Exempt supplies       100,000

Input tax on expenses had been paid as follows:

Standard- related supplies 

13,500

Zero- related supplies         5,000

Exempt supplies       9,000

General overheads   4,000

The general overhead input tax cannot be directly attributed to any of the listed supplies.

Requirement:

(a)       Calculate the VAT payable by Antrobus Limited for the quarter.      

(b)       State the records and accounts which must be kept for VAT purposes and state for how long they must be retained by the trader.