Advanced Taxation

Noah is a wine merchant with a year ended 31 March 2018. Which two of the following are allowable expenses in calculating Noah's taxable trading profits? A A gift of a £10 bottle of wine to each of 200 potential new customers as a marketing method to entice them to buy more wine in the future B Gifts to his two employees of a wine hamper costing him £60 for each employee C Legal costs relating to the acquisition of a 25-year lease on new business premises D Donation to a national charity

A - A gift of a £10 bottle of wine to each of 200 potential new customers as a marketing method to entice them to buy more wine in the future B - Gifts to his two employees of a wine hamper costing him £60 for each employee

Which two of the following are exempt assets for CGT? A A vintage Bentley car B A shop used by a sole trader in his business C Painting worth £4,500 (cost £1,500) D Shares in an unquoted trading company

A - A vintage Bentley car C - Painting worth £4,500

Leo, a sole trader, allowed the following amounts in arriving at his draft taxable trading profits of £180,000 for the year ended 31 March 2018. Select how each item should be treated in the adjustments to profits working in order to determine Leo's final taxable trading profits. Leo included £550 relating to the write off of a loan to an employee who left the business some time ago. A Add back £550 B Deduct £550 C Do not adjust Leo deducted £600 relating to charitable donations to Oxfam (a national registered charity). A Gift Aid declaration had been made in respect of the donation. D Add back £600 E Do not adjust

A - Add back £550 D - Add back £600

The following sentences have been included in a draft letter to a client who is about to start a new business. Identify whether each statement is correct or incorrect. Expenditure shown in the profit and loss account is not always allowable for tax purposes. Disallowable expenditure must be added back when computing the taxable trading profits. A Correct B Incorrect The building that you are acquiring is dilapidated and requires repair work. You are not able to use the building until this work has been completed. The additional expenditure incurred on this repair work is allowable when computing taxable trading profits. C Correct D Incorrect

A - Correct B - Incorrect

George sold a holiday flat in October 2018. He had bought the flat in May 2001. Select two of the following costs which will be deductible in computing George's chargeable gain on sale. A Cost of advertising on sale B Minor repairs to guttering C Installing completely new heating system D Repainting walls

A - Cost of advertising on sale C - Installing completely new heating system

Flynn has been a sole trader for many years. His profit and loss account to 31 January 2018 includes the following items of expenditure. Which two are fully allowable in calculating Flynn's taxable trading profits? A Costs of registering a patent for trade use B Payment of a parking fine incurred by Flynn while travelling on business C Payment of £12,000 to his wife Freya for working as one of his shop assistants. The other assistants earn £8,000 per annum for working similar hours D The legal costs for renewing the 10-year lease on his shop premises

A - Costs of registering a patent for trade use D - Legal costs for renewing the 10-year lease on his shop premises

Sam is a sole trader with an accounting profit of £42,674 for the year ended 31 March 2018. The following two items are included in the accounts in arriving at the accounting profit. Select what adjustment, if any, needs to be made to arrive at the tax-adjusted trading profit. Bank interest received of £280 on the business bank account. A Deduct £280 B Add £280 C Do not adjust Profit of £490 on disposal of a machine D Add £490 E Deduct £490 F Do not adjust

A - Deduct £280 D - Deduct £490

Which two of the following items are treated as 'non-taxable income' for income tax purposes? A Income tax repayment interest B Interest paid on a loan between two friends C National Lottery winnings D Pension income E Tips given to staff by customers

A - Income tax repayment interest C - National lottery winnings

Which of the following actions by a taxpayer would not constitute tax evasion? A Obtaining tax-free interest by investing in an ISA B Claiming capital allowances on a fictitious item of plant C Choosing not to declare rental income received D Failing to notify HMRC of a profitable trade commenced two years ago

A - This is a legitimate way to reduce tax, whereas the others all constitute tax evasion and are illegal.

Andy is a sole trader and a higher-rate taxpayer. His accounting profit for the year ended 31 March 2018 includes a deduction of £938, which is the amount of a donation made to a local hospital under the Gift Aid scheme on 1 February 2018. Select whether the following statements are true or false relating to this donation. An amount of £938 must be added back to the accounting profit to arrive at the adjusted trading profit A True B False The basic rate band must be extended by £938 to correctly calculate Andy's tax liability C True D False

A - True D - False

Hovawart plc included the following amounts in arriving at its draft trading income of £666,888 for the year ended 31 May 2018. Select whether an adjustment to profits should be made for each of the following items in order to determine Hovawart plc's final trading income. Depreciation of £156,742 A Adjust B Do not adjust Interest of £1,500 received on a loan to an employee C Adjust D Do not adjust

A - adjust C - adjust

Capricorn plc has calculated the following amounts which have yet to be included in its final trade profits. Select how each item should be treated in the adjustment to profits working in order to determine Capricorn plc's final trade profits. Capricorn plc has calculated a balancing charge of £500 arising as a result of the disposal of plant A Increase trade profits by £500 B Reduce trade profits by £500 C Do not include in trade profits Capricorn plc made a £100 donation to the local children's hospital after one of its employee's children was treated there D Increase trade profits by £100 E Reduce trade profits by £100 F Do not include in trade profits

A - increase trade profits by £500 E - Reduce trade profits by £100

David began trading on 1 May 2017. On that date he brought a car into the business (business use only) valued at £10,000. The car has CO2 emissions of 128g/km David made up his first accounts to 31 December 2017. What is the maximum capital allowance that David can claim for the period to 31 December 2017? A £1,200 B £1,800 C £6,667 D £10,000

A - £1,200

Norman inherited a painting from his aunt in July 2006. His aunt had bought the painting in 1997 for £9,000. The market value of the painting at the date of her death was £15,000. Norman sold the painting for £40,000 in November 2018. He incurred auctioneers' costs of £2,000 on the sale. What is Norman's chargeable gain on the sale? A £23,000 B £25,000 C £29,000 D £31,000

A - £23,000

Michael bought a painting in July 2002 for £10,000 and sold it for £26,000 in August 2018. Incidental costs of disposal amounted to £1,250. Michael made no other disposals in 2018/19. Michael had taxable income after deducting the personal allowance of £33,130 for 2018/19. What is Michael's capital gains tax liability for 2018/19? A £463 B £345 C £1,475 D £690

A - £463

Jacob receives a monthly salary of £3,000 and an annual bonus payable on 30 April each year, although the bonus actually relates to the previous year ended 31 March. His recent bonuses have been as follows: Relating to Year ending: 31/03/2017, date paid: 30/04/2017, amount: £16,500. Relating to: year ended 31/03/2018, date paid: 30/04/2018, amount: £13,400 What is Jacob's employment income assessment for 2017/18? A - £52,500 B - £49,400 C - £16,500 D - £13,400

A - £52,500

Jacob has been trading for many years, making up accounts to 31 December. Jacob had tax written down values at 1 January 2017 of: Main pool: £11,800 Car (purchased 2011 with CO2 emissions of 135g/km - 40% private use by Jacob): £14,000 On 15 May 2017 Jacob purchased a car for 50% business, 50% private use by an employee, with CO2 emissions of 125g/km at a cost of £7,600. On 22 September 2017 Jacob spent £1,500 on a zero-emission goods vehicle. What are the maximum capital allowances that Jacob can claim for the year to 31 December 2017? A £6,504 B £5,004 C £5,274 D £5,820

A - £6,504

In 2017/18 Jacob was provided with various benefits by his employer Bony Ltd, a manufacturer of televisions, in addition to his salary of £50,000 per annum. Identify the amount chargeable as employment income for each benefit. Private health insurance, costing Bony Ltd £800. The same insurance would have cost Jacob £1,100. A £800 B £1,100 A television out of stock which cost £200 to manufacture but would cost Bony Ltd £800 to buy in from another supplier. C £200 D £800 A car parking space at a car park near to the office which cost Bony Ltd £500 in 2017/18. E £0 F £500

A - £800 C - £200 E - £0

Which two of the following are functions carried out by HMRC? A Collect and administer direct taxes B Pay and administer jobseekers allowance C Enforce the minimum wage rules D Pay and administer the state pension

A Collect and administer direct taxes C Enforce minimum wage rules

Which of the following is chargeable to income tax? A Interest from a NS&I investment account B Dividends received from an Individual Savings Account C £10 Lottery winnings D Scholarship awarded by a university

A Interest from a NS&I investment account

Which two of the following are non-trading loan relationship debits of a company under the loan relationship rules? A Interest payable on loan to purchase property to let B Bank overdraft interest C Interest on loan to purchase machinery D Interest on overdue corporation tax

A Interest payable on loan to purchase property to let D Interest on overdue corporation tax

Russell plc allowed the following amounts in arriving at its draft trading income of £1,555,000. Select how each item should be treated in the adjustment to profits working in order to determine Russell plc's final trading income. Russell plc included £4,000 relating to the loss on disposal of an item of machinery A Add back £4,000 B Deduct £4,000 C Do not adjust Russell plc included £144,400 relating to redundancy costs (employees received an amount equal to their annual salary) D Add back £144,400 E Deduct £144,400 F Do not adjust

A add back £4,000 F do not adjust

A professional accountant is asked by her father, a partner in the firm employing her, to overstate the allowable expenses in a client's tax-adjusted accounts. He is offering to recommend she receive a bonus payment if she does this. Which two threats to objectivity is the professional accountant faced with in this situation? A Self-interest B Self-review C Familiarity D Intimidation

A and C - The family connection leads to a familiarity threat. The bonus offered constitutes a self-interest threat.

Spitz plc has calculated the following amounts which have yet to be included in its final trading income. Select how each item should be treated in the adjustment to profits working in order to determine Spitz plc's final trading income. Spitz plc has calculated a balancing charge of £2,500 arising as a result of a disposal from the main pool A Increase trading income by £2,500 B Reduce trading income by £2,500 C Do not include in trading income Spitz plc sponsored three employees for £100 each for taking part in a marathon on behalf of Oxfam (an internationally registered charity) D Increase trading income by £300 E Reduce trading income by £300 F Do not include in trading income

A increase trading income by £2,500 F do not include

Kyl Ltd has agreed to provide each of its employees with a bicycle costing £850 for use at home and for travelling to work. The bicycles will remain the property of Kyl Ltd. The company will also provide its employees with vouchers worth £25 per week for 44 weeks per year for use with an approved child carer. How much additional employment income will each of the company's employees have in a full year as a result of the provision of the two benefits? A £0 B £170 C £1,100 D £1,270

A £0

Newfoundland Ltd, a trading company, included £47,300 relating to pension costs in arriving at its draft trading income. In addition, £17,000 being an opening accrual was paid. No closing accrual was required. What adjustment is required in order to determine Newfoundland Ltd's final trading income? A £17,000 B £0 C £64,300 D £47,300

A £17,000

Sally is provided with accommodation which originally cost her employer £45,000 in 1983. In 2008 £15,000 was spent on capital improvements. Sally first occupied the property on 6 April 2017 when its market value was £425,000. The annual rateable value of the property is £18,000. What is the taxable benefit of the living accommodation for 2017/18? A £18,000 B £8,750 C £26,750 D £60,000

A £18,000

Imogen is a sole trader and her accounts show £7,700 on repairs and maintenance during the year to 30 September 2017. Repair to a newly acquired second hand machine to make it usable: £2.4k. Repairs to the roof of the office damaged in a storm: £3.8k. Redecorating the office: £1.5k. How much should be added back to the accounting profit for tax purposes? A - £2,400 B - £3,900 C - £5,300 D - £7,700

A £2,400

Lesley first occupied accommodation provided by her employer on 6 January 2018. The property was originally purchased by her employer in 2013 for £325,000. Capital improvements were made to the property in 2015 at a total cost of £45,000. Lesley pays her employer £12,000 per annum in rent. The annual rateable value of the property is £19,000. What is the value of the taxable benefit for the living accommodation in 2017/18? A £3,594 B £14,375 C £3,313 D £6,594 Assume an official rate of interest of 2.5%.

A £3,594

Tom has traded as a greengrocer for many years. In his year ended 30 April 2017 he took fruit and vegetables from the business which cost £350. He could have sold the goods for £600. Tom has not recorded this transaction in his accounts. The amount to be added back to the net profit per the accounts to arrive at taxable trading profits for the year ended 30 April 2017 is A £600 B £350 C £250 D £0

A £600

Joshua is given the use of some music equipment by his employer on 6 September 2017 for private purposes. At the time it was first made available to Joshua it had a market value of £8,460 although it originally cost £10,000 two years ago when purchased for company use. What is the taxable benefit for the music equipment for 2017/18? A £987 B £1,167 C £1,692 D £2,000

A £987

Andrew is a sole trader who uses the cash basis for income tax purposes. His accounts for the year to 31 December 2017 include a deduction of £10,000 for the purchase of a car on 1 July 2017. The car has CO2 emissions of 125g/km and is used only for business. The accounts also include a deduction of £6,000 for a new machine on 15 October 2017. What adjustment to Andrew's accounting profit for the year to 31 December 2017 is required to arrive at his taxable trading profit after capital allowances? A Add back £16,000; deduct capital allowances of £1,800 B Add back £10,000; deduct capital allowances of £1,800 C Add back £16,000; deduct capital allowances of £7,800 D Add back £10,000; deduct capital allowances of £7,800

B - Add back £10,000, deduct capital allowances of £1,800

Anne and Jane have been in partnership for many years making up accounts to 30 November. The profit-sharing agreement of the partnership is that Anne is entitled to an annual salary of £10,500 and Jane is entitled to an annual salary of £12,300. They are also entitled to interest at 5% on capital introduced to the partnership. Anne has capital of £52,500 and Jane has capital of £34,500. Any remaining profits are shared equally. For the year ended 30 November 2017, the taxable trading profit of the partnership is £147,750. What is the taxable trading profit of the partners for 2017/18? A Anne £60,300, Jane £60,300 B Anne £73,425, Jane £74,325 C Anne £73,875, Jane £73,875 D Anne £87,000, Jane £87,900

B - Anne £73,425, Jane £74,325

Which two of the following taxes may be payable by a company? A National insurance at 2% on its taxable trading profits B Corporation tax at 19 % on its taxable trading profits C Capital gains tax at 10% on its chargeable gains D Value added tax at 20% on its purchases

B - Corporation tax D - VAT

Tadzio, a sole trader, has included the following amounts in arriving at his draft taxable trading profits. Select how each amount should be treated in the adjustments to profits working in order to determine Tadzio's final taxable trading profits. Tadzio has calculated a profit on disposal of a machine to be £3,250. A Add back £3,250 B Deduct £3,250 C Do not adjust Tadzio and his salesman incurred parking fines of £200 and £100 respectively while on business. D Add back £200 E Add back £300 F Do not adjust

B - Deduct £3,250 D - Add back £200

Peri is self-employed and in December 2017 he made the following gifts. Select whether each of the following gifts is allowable or disallowable when calculating Peri's tax adjusted trading profit. A food hamper costing £35 to each client. Each hamper basket had the name of the business on the outside. A Allowable B Disallowable A food hamper costing £60 to each employee. Each hamper basket had the name of the business on the outside. C Allowable D Disallowable

B - Disallowable C - Allowable

Paul Sarbanes is a self-employed garage proprietor in Leeds. On 22 December 2017 he made the following gifts. Identify whether each gift is allowable or disallowable when calculating Paul's tax adjusted trading profit. A case of wine costing £48 to a customer. Each bottle had the name of the garage on the label. A Allowable B Disallowable Four bottles of spirits costing £90 to an employee. C Allowable D Disallowable Cash bonus of £60 to each of his three junior employees. E Allowable F Disallowable

B - Disallowable C - Allowable E - Allowable

Soria deducted the following amounts in arriving at her taxable trading profits of £65,329 for the year ended 31 March 2018. Select whether an adjustment to profits should be made for each of the following items in order to determine Soria's final tax adjusted trading profit. £10,000 as salary to her husband who works two days per week as a bookkeeper for her business A Adjust B Do not adjust Irrecoverable VAT of £3,500 on a company car purchased for an employee C Adjust D Do not adjust

B - Do not adjust C - Adjust

Paola is a sole trader. She has deducted the two items listed below in arriving at her draft tax adjusted profits of £46,223 for the year ended 28 February 2018. Select whether an adjustment to profits should be made for each of the following items in order to determine Paola's final tax-adjusted trading profits. A restaurant bill for £432 for a staff party attended by Paola and all three employees A Adjust B Do not adjust Staff costs of £3,298 relating to work undertaken preparing the accounts for the business by Paola's husband C Adjust D Do not adjust

B - Do not adjust D - Do not adjust

Sagittarius plc deducted the following amounts in arriving at its draft trade profits of £654,544 for the year ended 31 January 2018. Select whether an adjustment to profits should be made for each of the following items in order to determine Sagittarius plc's final trade profits for tax purposes. £599 of legal costs relating to the renewal of a 25-year lease A Adjust B Do not adjust Irrecoverable VAT of £3,500 on a company car purchased for an employee's use C Adjust D Do not adjust

B - Do not adjust C - Adjust

Pryor, Feinstein and Hill are employees of Boxer Ltd each earning £40,000 per annum. Boxer Ltd is to provide Pryor with a company van, Feinstein with a company car and Hill with a company bicycle. Pryor and Feinstein will use their vehicles for business and for commuting to work only. Hill will use his bicycle for commuting only. All employees had the option of a company bicycle. Identify whether each of the employees has a taxable or exempt benefit in relation to their mode of transport. Pryor's company van is A Taxable B Exempt Feinstein's company car is C Taxable D Exempt Hill's company bicycle is E Taxable F Exempt

B - Exempt C - Taxable F - Exempt

Sunil is employed as a hairdresser by Hairy Monsters. He is paid £30,000 per annum and provided with a number of benefits. Select whether the following benefits are taxable or exempt from income tax. Employer contributions to occupational pension scheme A Taxable B Exempt Childcare vouchers for use with an approved provider worth £40 per week C Taxable D Exempt Living accommodation E Taxable F Exempt

B - Exempt D - Exempt E - Taxable

Identify whether the following statements are correct or incorrect. Pippin is provided with a van by his employer Joker Ltd. Pippin has an assessable van benefit if, in addition to business journeys, he uses the van to travel from home to work. A Correct B Incorrect Piers makes a nominal contribution towards the fuel cost on his company car of £10 per month. This accounts for about 95% of his private use. Piers is able to reduce his fuel benefit by £120 pa. C Correct D Incorrect

B - Incorrect D - Incorrect

Niamh's accounts for the year ended 30 September 2017 showed legal and professional fees of £8,000. Which two of the following costs are not allowable in calculating her tax-adjusted trading profit? A Fees incurred in the recovery of a trade bad debt B Legal fees for a successful appeal against a tax assessment C Renewal of a ten-year lease on business premises D Fees for preparation of the annual accounts E Cost of taking out a new five-year lease on business premises

B - Legal fees of a successful appeal against a tax assessment E - Cost of taking out a new five-year lease on business premises

Dewi and Dilys are married. Dewi is a basic rate taxpayer earning only a salary and Dilys pays no tax. Dilys has elected to transfer £1,150 of her personal allowance to Dewi. Which letter will complete Dewi's tax code? A L B M C N D K

B - M

Caroline is a sole trader and identified the following amounts which have not been included in her accounts. Select how each item should be treated in the adjustment to profits working in order to determine Caroline's tax adjusted trading profit. Caroline has personally paid for her home telephone bills which include calls of £1,000 of which 30% relates to business A Increase trading profits by £300 B Reduce trading profits by £300 C Do not include in calculating tax adjusted trading profits Caroline made a £200 donation to a local hospice, this was not paid under the Gift Aid scheme D Increase trading profits by £200 E Reduce trading profits by £200 F Do not include in calculating tax adjusted trading profits

B - Reduce trading profits by £300 E - Reduce trading profits by £200

Aquarius plc allowed the following amounts in arriving at its draft trade profits of £53,000. Select how each item should be treated in the adjustment-to-profits working in order to determine Aquarius plc's final trade profits. Aquarius plc included £1,090 relating to the profit on disposal of an item of machinery A Add back £1,090 B Deduct £1,090 C Do not adjust Aquarius plc included an expense of £21,400 relating to director bonuses and salaries (the directors are also the majority shareholders) D Add back £21,400 E Deduct £21,400 F Do not adjust

B - deduct £1,090 F - Do not adjust

Gordon has been trading for many years making up his accounts to 31 May each year. His taxable trading profits are as follows: y/e 31 May 2016: £12,000 y/e 31 May 2017: £14,000 y/e 31 May 2018: £18,000 What is the taxable trading profit taxed in 2017/18? A £12,000 B £14,000 C £17,333 D £18,000

B - £14,000

Ross ceased trading on 31 March 2018. His taxable trading profits were: y/e 31 December 2016: £6,800 y/e 31 December 2017: £5,600 p/e 31 March 2018: £4,500 Ross had £2,300 of overlap profits on commencement. What is the taxable trading profit for 2017/18? A £10,100 B £7,800 C £6,400 D £2,200

B - £7,800

Perry received income from various sources during 2018/19. Which two of the following are exempt from income tax? A £100 of National Savings & Investments Direct Saver Account interest B £80 of National Savings Certificate interest C £40 of interest received on a loan to his friend George D £56 of dividends received from a shareholding in X plc E £40 of dividends received on Y plc shares held in a stocks and shares ISA

B - £80 of National Savings Certificate Interest E - £40 of dividends on Y pls shares held in a stocks and shares ISA

At what rates is tax charged on savings income? A 0%, 7.5%, 32.5%, 38.1% B 0%, 20%, 40%, 45% C 0%, 20%, 32.5% D 20%, 32.5%, 40%, 45%

B 0%, 20%, 40%, 45%

Your manager has made following statements about what qualifies as job related living accommodation: 1 - Accommodation is provided for the better performance of an employee's duties and it is customary to be so provided 2 - Accommodation is provided for security reasons 3 - Accommodation enables the employee to work longer hours by reducing time spent commuting 4 - Accommodation provided to directors owning more than 5% of the company is never job related Which of following options identifies which of these statements are true? A All of them B 1and2only C 1, 2 and 3 only D 1,2and4only

B 1 and 2 only

Identify the effect of the following items on the relevant tax liabilities. Mark has employment income in 2017/18 of £160,000, and no other sources of income. On 1 February 2018 Mark paid £2,100 to a charity under the Gift Aid provisions. In 2017/18 the Gift Aid payment will A increase Mark's income tax liability B decrease Mark's income tax liability C have no impact on Mark's income tax liability

B Decrease Mark's income tax liability

Which two of the following sources of income are non-savings income? A Interest from a building society B Property income C Dividend from a UK company D Trading profits

B Property income D Trading profits

Which two of the following are direct taxes? A Excise duty B Capital gains tax C Value added tax D Corporation tax

B and D - capital gains tax and corporation tax. The others are indirect taxes.

Virgo Ltd, a manufacturing company, included £35,000 relating to pension costs in arriving at its draft trade profits for the year ended 31 December 2017. This included a closing accrual of £12,000 with only the balance actually being paid into a registered pension scheme during the year. How much should be added back in order to determine Virgo Ltd's final trade profits? A £0 B £12,000 C £23,000 D £35,000

B £12,000

Pug Ltd included £33,400 relating to interest costs in arriving at its draft trading income. £13,000 related to interest payable on a loan used to purchase new machinery. The remaining £20,400 related to interest payable on a loan used to buy an investment. How much interest is allowable against trading income? A £0 B £13,000 C £33,400 D £20,400

B £13,000

Paris plc prepared its first set of accounts for the 12 months ended 31 March 2018. On 1 January 2018 it purchased a new car for £14,400 (CO2 emissions 120g/km). What is the maximum amount of capital allowances Paris plc may claim for the 12 months ended 31 March 2018? A £648 B £2,592 C £3,600 D £14,400

B £2,592

Rottweiler Ltd acquired £1,540,000 of 10% debentures for investment purposes on 1 January 2018. Interest is payable half yearly on 31 December and 30 June each year. Accordingly, Rottweiler Ltd did not actually receive any interest during the year to 28 February 2018. How much interest is taxable in the year ended 28 February 2018? A £154,000 as trading income B £25,667 as a non-trading loan relationship credit C £0 D £154,000 as a non-trading loan relationship credit E £25,667 as trading income

B £25,667

Duncombe Ltd purchased a flat in London in 2001 for £280,000. On 6 February 2018 the company recruited a new sales director and allowed him to live in the flat for the remainder of 2017/18. The market value of the flat in February 2018 was £375,000. The company installed double glazing in March 2008 at a cost of £14,000 and air-conditioning in March 2018 at a cost of £29,000. What is the 'cost' of the flat for the purpose of computing the additional yearly rental benefit for 2017/18? A £404,000 B £375,000 C £323,000 D £389,000

B £375,000

Duncombe Ltd purchased a flat in London in 2001 for £280k. On 6 Feb 2018 co recruited a new sales director and allowed him to live in the flat for the remainder of 2017/18. MV of flat in Feb 2018 was £375k. Co installed double glazing in March 2008 at cost of £14k and air conditioning in March 2018 at cost of £29k. What is 'cost; of the flat for purpose of computing additional yearly rental benefit for 2017/18? A - £404k B - £375k C - £323k D - £389k

B £375,000

Oliver is employed by Munton plc and earns £20,000 a year. He also receives the following benefits during 2017/18: Meal vouchers of £2 per day (240 working days in year) Pension advice costing £100 Ticket to sporting event from a customer of Munton plc worth £50 What are Oliver's taxable benefits for 2017/18? A £0 B £480 C £580 D £530

B £480

Simon takes goods from his business with a selling price of £540. The cost price is £360. He pays £100 for the goods. Simon's accounts show the transaction as drawings of £360. What is the adjustment required? A No adjustment required B £80 C £180 D £540

B £80

Cashew Ltd drew up accounts for the six-month period to 30 June 2018. Cashew Ltd pays interest on its £20,000 9% debenture stock annually on 31 March. The debenture stock finances the company's working capital. Cashew Ltd paid £100 interest in respect of late corporation tax on 30 June 2018. How much interest is allowable against trading profits for the six months ended 30 June 2018? A £0 B £900 C £1,000 D £1,800

B £900

What are the dates of the Financial Year 2017? A 1 April 2016 to 31 March 2017 B 1 January 2017 to 31 December 2017 C 1 April 2017 to 31 March 2018 D 6 April 2017 to 5 April 2018

C - 1 April 2017 - 31 March 2018

Posh Ltd started trading on 1 December 2016 and made up its first set of accounts to 31 March 2018. Posh Ltd's accounting periods will be: A 4 months to 31 March 2017, 12 months to 31 March 2018 B 4 months to 5 April 2017, 12 months to 31 March 2018 C 12 months to 30 November 2017, 4 months to 31 March 2018 D 16 months to 31 March 2018

C - 12 months to 30 Nov 2017, 4 months to 31 March 2018

In addition to his wages, Massimo has received income from various sources during 2018/19. Which two of the following are exempt from income tax? A Pension income B Interest received on a loan to his son C Dividends from shares held in an ISA D Gratuities and tips received from customers E Premium bond winnings

C - Dividends from shares held in an ISA E - Premium bond winnings

Huckleberry, a sole trader, has calculated the following amounts which have yet to be included in his final taxable trading profits. Select how each item should be treated in order to determine Huckleberry's final taxable trading profits. Huckleberry has calculated his irrecoverable VAT on UK client entertaining to be £4,656 A Increase taxable trading profits by £4,656 B Reduce taxable trading profits by £4,656 C Do not include in taxable trading profits Huckleberry gave his customers calendars worth £35 each bearing the business logo. In total he spent £3,500 on the calendars. D Increase taxable trading profits by £3,500 E Reduce taxable trading profits by £3,500 F Do not include in taxable trading profits

C - Do not include E - Reduce taxable trading profits by £3,500

Red Ltd had the following shareholdings: Silver Ltd 40% Taupe Ltd 60% Umber Ltd 75% (company is a passive company with no trade) Violet Ltd 90% Which companies are related 51% group companies for the purposes of determining the limit for Red Ltd's corporation tax payment dates? A Red Ltd, Silver Ltd, Taupe Ltd and Violet Ltd B Red Ltd, Taupe Ltd, Umber Ltd and Violet Ltd C Red Ltd, Taupe Ltd and Violet Ltd D All of them

C - Red Ltd, Taupe Ltd, Violet Ltd

Governments change their tax policy to achieve 'social justice'. Which of the following has not been an important principle of social justice in modern politics? A Progressive principle B Ability to pay principle C Neutrality principle D Regressive principle

C - the neutrality principle (taxes should not distort choice).

Scorpio plc charged the following items in arriving at its net profit for the year to 31 March 2018: Amount written off stock to reduce it to net realisable value: £4,600. Interest on late payment of corporation tax: £16,456. How much should be disallowed when calculating Scorpio plc's trade profits for the year? A £0 B £4,600 C £16,456 D £21,056

C - £16,456

Florrie started trading on 1 September 2017. She decided to make up her accounts to 30 April each year. In the eight months to 30 April 2018, Florrie had taxable trading profits of £8,000. She estimates that her taxable trading profits for the year to 30 April 2019 will be £15,000. What is the taxable trading profit taxed in 2017/18? A £6,000 B £4,667 C £7,000 D £8,000

C - £7,000

Tricia is employed by Wilton Ltd at a salary of £15,000 per year. She is also entitled to taxable benefits of £3,860. She has no tax overpaid or underpaid from previous tax years. What is Tricia's tax code for 2017/18? A 1150L B 765L C 799L D 763L

C 799L

How is higher rate tax relief given for a Gift Aid donation? A Deducted from net income B Treated as paid net of higher rate tax C Basic rate band extended by grossed up donation D No higher rate tax relief given

C Basic rate band extended by grossed up donation

Which of the following is an allowable expense? A Gift of fleece jackets to customers with trade logo costing £55 each B Increase in general provision for bad debts C Legal expenses on employment contracts D Gift Aid donation

C Legal expenses on employment contracts

Which of the following is an allowable expense for a sole trader? A Repairs to a newly purchased second-hand machine. The repairs were essential before the machine could be used B Write-off of a loan to a former employee C Legal fees for the renewal of a 20-year lease D Donation to a small local charity, under the Gift Aid scheme

C Legal fees for the renewal of a 20-year lease

A taxpayer has net income of £42,800 in 2017/18. What savings income nil rate band is he entitled to? A £11,500 B £5,000 C £1,000 D £500

C £1,000

Robert has an annual salary of £56,000 and has received the following benefits during 2017/18: Childcare vouchers of £45 per week (£2,340 per year); and Meal vouchers of £5 per day for 240 days of the year. Robert has been receiving these benefits since 2009. Select which of the following correctly identifies Robert's taxable benefits for 2017/18. A £2,084 B £3,540 C £1,200 D £884

C £1,200

Patrick's accounts show £16,550 on repairs and maintenance during the year to 30 September 2017: Demolishing out-house and building new toilets = £5,950. Repainting offices = £3,600. Installing new heating system = £7,000. How much should be added back to the accounting profit? A - £9,550 B - £10,600 C - £12,950 D - £16,550

C £12,950

Pisces Ltd included £26,500 relating to interest costs in arriving at its draft trade profits. £20,000 related to interest payable on a loan used to build a new factory, including a closing accrual of £4,000. The remaining £6,500 related to interest payable on a loan used to purchase shares in a subsidiary. How much interest is allowable against trade profits? A £0 B £16,000 C £20,000 D £26,500

C £20,000

Sumira moved into a house provided by her employer on 6 August 2017 when the market value was £499,000. The house cost £465,000 in January 2012. The annual rateable value of the property is £21,000. What is the taxable benefit for the living accommodation in 2017/18? A £28,067 B £6,500 C £20,500 D £30,750 Assume an official rate of interest of 2.5%.

C £20,500

Glad Ltd has a 10-month period of account from 1 April 2017 to 31 January 2018. The company bought a car (with CO2 emissions of 123g/km) on 4 August 2017 for £20,000. The car is used 30% privately by one of the directors. What are the maximum capital allowances that Glad Ltd can claim? A £2,100 B £2,520 C £3,000 D £3,600

C £3,000

Since 1 January 2016 Amy has been provided with an apartment by her employer. The annual value of the accommodation is £1,500. The original cost of the apartment to her employer in 2001 was £81,000. The market value of the apartment on 1 January 2016 was £165,000, and on 6 April 2017 was £180,000. The official rate of interest at 6 April 2017 is 2.5%. What is Amy's accommodation benefit for 2017/18? A £1,500 B £2,250 C £3,750 D £1,650

C £3,750

Gerrard works for Frame Ltd. He has use of a staff canteen which is available to all employees. The meals in the canteen cost him £1.50 per day although the cost of providing the meals equates to £2.50 per day. He uses the canteen 200 days each year. He was also reimbursed overnight expenses totalling £30 when he worked away from home in Edinburgh for 4 nights. How much additional employment income will Gerrard have as a result of the provision of the two benefits? A £230 B £210 C £30 D £10

C £30

Labrador Ltd has incurred the following legal expenses in its first accounting period. Preparation of directors' employment contracts (the directors are also the shareholders): £4,600 Issue of share capital: £2,000 Acquiring a 30-year lease: £3,000 How much legal expense is disallowed for tax purposes? A £2,000 B £3,000 C £5,000 D £9,600

C £5,000

Emily is provided with a company flat as a benefit of her job in addition to her annual salary of £66,000. Emily's employer rents the flat at an annual cost of £15,000. The annual rateable value of the flat is £8,900. Emily makes a contribution to the rent of £7,000 per annum. What is the taxable benefit of the flat? A £15,000 B £8,900 C £8,000 D £1,900

C £8,000

Sandra works for Julian (a sole trader) as a part-time salesperson at a salary of £6,000 a year. On 31 December 2017, she received a bonus of £2,000 in respect of Julian's trading results for the year ended 30 September 2017. She expects to receive a bonus of £2,500 in December 2018 in respect of the year ended 30 September 2018. What are Sandra's assessable earnings for 2017/18? A £6,000 B £7,250 C £8,000 D £8,250

C £8,000

A professional accountant has been asked to act for a taxpayer who is negotiating a redundancy settlement with his employer. The employer concerned is a company which is one of the professional accountant's existing clients. Which of the following statements is true in this situation? A The conflict here is between the accountant and the existing client. B There is a perceived conflict of interest here but no actual conflict. C The professional accountant must not inform the employer or the company of the situation. D There is an actual conflict here between the company and the employee

D - There is an actual conflict here between the company and the employee. This should be disclosed to both parties.

Which of the following statements is true? A The gift of any asset is always an exempt disposal B Goodwill is an exempt asset for individuals C Shares are always exempt assets for individuals D The gift of a painting to a charity is an exempt disposal

D - the gift of a painting to a charity is an exempt disposal

Sergio bought a new car at a cost of £14,000 on 7 October 2017. The CO2 emissions of the car are 60g/km. What capital allowances can he claim in respect of the car for the year ended 31 March 2018? A £0 B £1,260 C £2,520 D £14,000

D - £14,000

Aimee started trading on 1 April 2017. On 1 July 2017 she bought a single item of plant for £175,000. What is the maximum capital allowance Aimee can claim for the nine months to 31 December 2017? A £175,000 B £150,000 C £154,500 D £153,375

D - £153,375

Terry has been trading for many years making up accounts to 31 March each year. He has however decided to change his accounting date to 31 December and makes up accounts for the nine months to 31 December 2017. At 1 April 2017, the tax written down value of his main pool was £8,000. On 12 July 2017, Terry bought a van for use in the business costing £16,000. What are the maximum capital allowances that Terry can claim for the nine month period to 31 December 2017? A £3,240 B £4,320 C £17,440 D £17,080

D - £17,080

Nadia started trading on 1 January 2017. On 1 November 2017 she bought a single item of machinery for £214,000. What is the maximum capital allowance Nadia can claim for the year ended 31 December 2017? A £38,520 B £214,000 C £200,000 D £202,520

D - £202,520

Marcus has been trading for many years, making up accounts to 5 April. The tax written down value of the main pool was £900 at 6 April 2017. The only other asset in the business for capital allowances purposes was a car bought in 2016, which Marcus uses 75% for business purposes. The tax written down value of the car at 6 April 2017 was £7,000. On 1 September 2017 Marcus sold the car for £8,100. The original cost was £7,800. What are the maximum capital allowances available to Marcus for the year ended 5 April 2018? A £1,700 B £1,500 C £(438) D £300

D - £300

Ursula started trading on 1 January 2017. She decided to make up accounts to 31 October each year. Her taxable trading profits are as follows: p/e 31 October 2017: £3,000 y/e 31 October 2018: £23,760 y/e 31 October 2019: £31,000 What are the overlap profits? A £900 B £4,710 C £3,960 D £4,860

D - £4,860

William Pitt is a self-employed tax adviser in Coventry. In the year ended 31 March 2018 he made the following gifts. All of the recipients are registered charities. 1 £50 to the renovation fund for Coventry Cathedral (a local charity) 2 £50 to the World Wide Fund for Nature (a national charity) via the Gift Aid Scheme 3 £25 to the National Trust (a national charity) Select which of the following options shows the gift(s) allowed when computing William's trading profits assessment? A All of them B 3 only C 1 and 2 only D 1 only

D 1 only

Alexandra works for an airline. She received the following benefits during 2017/18: Gifts of jewellery from a customer worth £200; and Provision of free flights when there are spare seats available on the plane. The market value of the flights taken during the year is £4,550. Select which of the following correctly identifies Alexandra's taxable benefits for 2017/18. A £4,750 B £4,550 C £200 D £0

D £0

Hettie has worked for the same employer (a manufacturing company) for 30 years. She has an annual salary of £12,000 and has received the following benefits during 2017/18. Long service award of an original oil painting worth £1,400; and Free bus pass worth £455 to enable Hettie to travel from home to work on a public bus service which the employer subsidises. Select which of the following correctly identifies Hettie's taxable benefits for 2017/18. A £1,855 B £1,400 C £455 D £0

D £0

Rome plc charged the following items in arriving at its net profit for the year to 31 March 2018: Gifts of industrial trade samples to UK customers: £950. Gifts to UK customers - wall calendars bearing company logo costing £46,50 each: £4,650. How much should be allowed when calculating Rome plc's trade profits for the year? A £0 B £950 C £4,650 D £5,600

D £5,600

Gorilla Ltd commenced trading on 1 April 2017 and purchased a new motor car for £8,500 (a low emissions car) for the use of an employee (75% business use, 25% private). What is the maximum amount of capital allowances Gorilla Ltd may claim on the car for the six months ended 30 September 2017? A £3,188 B £4,250 C £6,375 D £8,500

D £8,500