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11,450
Electricity 810
Accountants fees 280
Depreciation 120
Drawings 640
Car expenses 1,840 (3,690)
Net profit 7,760
Amanda works from home and 40% of the electricity cost relates to personal use.
Her car was purchased new in 1998 for 12,000 and had a value of 6,400 when it was introduced into the
business on 1 December 2000. She uses the car 60% for business purposes.
Amandas only other asset is a sewing machine, which had a written down tax value for capital allowance purposes
of 240 on 1 June 2002.
Required:
(a) Calculate the maximum capital allowances that Amanda may claim for the year ended 31 May 2003.
(3 marks)
(b) Calculate the adjusted Schedule D Case I profits after capital allowances for the year ended 31 May 2003.
(4 marks)
(c) Calculate the assessable Schedule D Case I profits for the four tax years 2000/01 to 2003/04 inclusive.
(5 marks)
(d) Calculate the overlap profits for the opening years of assessment. (2 marks)
(14 marks)
End of Question Paper
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Answers
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ACCA Certified Technician Examination Paper T9(GBR) June 2004 Answers
Preparing Taxation Computations (UK Stream) and Marking Scheme
Marks
1 (a) Penny Donald Income tax assessment 2003/04
Non-savings Savings Dividend Total
Salary 46,000 05
Benefits (w1) 15,088
61,088
Pension contributions 4,200 1
52,273
Savings 3,000 x 40% 1,200 05
Dividend 1,000 x 325% 325 05
56,273 16,619
Deducted at source
Building society interest 600 05
Dividend 100 05
Pay as you earn (PAYE) 9,165 9,865 05
Tax payable 6,754
* Basic rate band extended by charitable donation 28,540 + (390 x 100/78) = 29,040 1
ISA interest not taxable 05
Working 1
Benefits Car CO
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emission 242
1st 155
87 05
Parking Exempt 1
Medical
insurance Cost of providing 800 1
Total 18
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Marks
(b) (i) P60 31 May 2004 2
(ii) P11D 6 July 2004 2
(iii) 30 September 2004 1
Total 5
(c) National insurance contributions (NIC)
Adrian Class 1 1st 4,615 nil 05
Next 26,325 x 11% 2,896 1
Next 7,060 x 1% 71 1
2,967
4,580
Total 5
(d) Schedule A income
Rent receivable (accruals basis):
AprilDecember 9/12 x 7,200 5,400
JanuaryMarch 3/12 x 7,800 1,950 7,350 1
Expenditure:
Water rates 380 05
Agents fees 780 05
Decoration 1,250 05
Interest 2,500 05
Wear and tear
(7,350 380) x 10% 697 5,607 15
Assessable amount 1,743
Kitchen units are regarded as capital expenditure and is not allowed as a deduction. 05
Total 5
Total answer 1 33
2 (a) (i) Baker Productions plc capital allowances for year ended 31 March 2004
P & M SLA Allowances
Balances b/forward 112,000 2,900
Disposal 3,400 05
112,000 500
Balancing charge 500 500 1
WDA 25% 28,000 28,000 05
84,000 0
Purchase 20,000 05
FYA 40% 8,000 8,000 05
96,000 nil
Total capital allowances 35,500
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Marks
Industrial buildings allowance (IBA)
Lower of cost or second-hand value 100,000
Remaining tax life 1 May 1998 31 July 2020 = 2225 yrs
100,000 = 4,494 3
2225
Total allowances: 35,500 + 4,494 = 39,994
Total 6
(ii) Baker Productions plc Corporation tax payable for year ended 31 March 2004
Adjusted trading profit 262,400 05
Less capital allowances 39,994 05
213,000
Rent 24,000 05
Schedule D Case III (8,000 + 14,000) 22,000 1
Capital gain (w1) 41,517
Capital loss brought forward 10,500 31,017 1
290,017
Charge on income 2,000 1
Profits 294,017
294,017
74,121
Working 1 Gain
Proceeds 180,000 05
Cost 60,000 05
Extension 21,000 81,000 05
99,000
Indexation allowance:
60,000 x 0866 51,960 05
21,000 x 0263 5,523 05
41,517
2
300,000 = 150,000 1
Total 13
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Marks
(b) City Merchandise Ltd Value Added Tax (VAT) for quarter ended 31 March 2004
Standard rated sales 110,000 x 95% x 175% 18,288 2
Standard rated purchases 60,000 x 175% 10,500 05
Electricity 4,000 x 7/47 596 05
Accounting 1,000 x 7/47 149 05
Repairs 2,500 x 7/47 372 11,617 05
Amount payable 6,671
Total 6
Total answer 2 25
3 (a) Bobby Jenkins Capital gains tax for the tax year 2003/04
18 May 2003
Net proceeds 8,450
Cost 3,200
5,250 1
Marginal relief
(9,000 6,000) x 5/3 5,000 2
8,200 1
Loss 1,500 2
2 March 2004
Proceeds 24,000
Indexed cost 13,460
10,540 1
13,807
Annual exemption 7,900 05
Tax payable:
1st 2,080 (30,500 28,420) x 20% 416 1
Remaining 3,827 (5,907 2,080) x 40% 1,531 05
1,947
Total 16
(b) A Student
Accountants Office
Somewhere
England
Tel:
Louise Duncan
At Home
Elsewhere
England
Reference:
June 2004
Dear Louise
DEFERMENT OF CAPITAL GAINS TAX
With reference to your query the relief that you refer to is replacement of
business asset relief, which is more commonly known as rollover relief. 1
The relief works by deducting the gain on the original disposal from the cost
of the replacement asset and subsequently using this reduced cost for the
calculation of the gain on the future disposal of that replacement asset. 1
The conditions which must be fulfilled are:
Both the sold and purchased assets must be used in the business.
Both assets must be within specified categories (mainly buildings and fixed plant
and machinery).
The replacement must be purchased within the time frame of one year before
and up to three years after the sale of the original asset.
All the proceeds of the sale must be reinvested or the relief is restricted by
the amount not reinvested. 4
If the asset purchased is a depreciating asset such as plant and machinery then a
modified version of the relief known as holdover relief is available. The difference 1
here is that the gain is not deducted from the replacement cost but is simply
deferred until the earliest of the following three events:
The new asset is sold
The new asset is no longer used in the business
The tenth anniversary of the purchase of the new asset 3
If you require further assistance please do not hesitate to contact me.
Yours sincerely
A Student Presentation 2
Total 12
Total answer 3 28
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Marks
4 (a) Amanda Cooke Capital allowances for the year ended 31 May 2003
Car
Period ended 31 May 2001
Value 6,400
WDA 25% x 6/12 800
5,600 1
Year ended 31 May 2002
WDA 25% 1,400 05
4,200
Year ended 31 May 2003
WDA 25% 1,050 x 60% 630 1
3,150
Sewing machine
Year ended 31 May 2003
Balance b/forward 240
WDA 25% 60 60 05
180
Total 690
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(b) Amanda Cooke Adjusted Schedule D Case I profit for the year ended 31 May 2003
Net profit per accounts 7,760
less: Bank interest 450 05
7,310
Add back:
Electricity 810 x 40% 324 1
Depreciation 120 05
Drawings 640 05
Car expenses 1,840 x 40% 736 1,820 1
9,130
Capital allowances 690 05
8,440
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(c) Amanda Cooke Opening year assessments
2000/01 Actual
1 December 20005 April 2001
4/6 x 4,260 2,840 15
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Marks
(d) Amanda Cooke Overlap profits
19,385
Earned 4,260
8,190
6,935 2
total answer 4 14
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Preparing Taxation
Computations
(UK Stream)
ACCA CERTIFIED ACCOUNTING TECHNICIAN EXAMINATION
ADVANCED LEVEL
TUESDAY 14 DECEMBER 2004
QUESTION PAPER
Time allowed 3 hours
ALL FOUR questions are compulsory and MUST be answered
Tax rates and allowances are on pages 35
Do not open this paper until instructed by the supervisor
This question paper must not be removed from the examination
hall
The Association of Chartered Certified Accountants
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The question paper begins on page 3.
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The following tax rates and allowances are to be used in answering the questions
Income Tax
Starting rate 11,960 10%
Basic rate 1,96130,500 22%
Higher rate 30,501 and above 40%
Note:
UK dividends will be taxed at 10% when they fall within the basic rate band and 325%
thereafter.
Personal allowance
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Capital allowances
%
Plant and machinery
Writing down allowance 25
First year allowance plant and machinery 40
information and communication
technology equipment
(until 31 March 2004) 100
low emission motor cars 100
Industrial buildings
Writing down allowance 4
Corporation tax
Financial year 2003 2002
Starting rate 0% 0%
Small companies rate 19% 19%
Full rate 30% 30%
Starting rate lower limit 10,000 10,000
Starting rate upper limit 50,000 50,000
Small companies lower limit 300,000 300,000
Small companies upper limit 1,500,000 1,500,000
Marginal relief fraction:
Starting rate 19/400 19/400
Small companies rate 11/400 11/400
Marginal relief
(M P) x I/P x Marginal relief fraction
Value added tax
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Capital gains tax: taper relief
The percentage of the gain chargeable is as follows:
Complete years after 5 April Gains on Gains on
1998 for which asset held business assets non-business assets
% %
0 100 100
1 50 100
2 25 100
3 25 95
4 25 90
5 25 85
6 25 80
7 25 75
8 25 70
9 25 65
10 25 60
National insurance contributions
(not contracted-out rates)
%
Class 1 employee 14,615 per year Nil
4,61630,940 per year 110
30,941 and above per year 10
Class 1 employer 14,615 per year Nil
4,616 and above per year 128
Class 1A 128
Class 2 200 p.w.
Class 4 14,615 per year Nil
4,61630,940 per year 80
30,941 and above per year 10
All apportionments should be made to the nearest month.
Calculations and workings need only be made to the nearest .
All workings should be shown.
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ALL FOUR questions are compulsory and MUST be attempted
1 (a) Tony Gray is 43 years old and is employed as an advertising manager for Ads4U Ltd, a UK resident company.
It is now 14 June 2004 and Tony is preparing his tax return for the tax year 200304. He has gathered together
the following documents and other information for that year:
Form P60 showing taxable employment income of 38,460 and income tax deducted under PAYE of
7,442
Form P11D showing total taxable benefits received of 2,290
A bank statement from County Bank plc showing net interest credited of 280
An interest statement from Town Building Society showing net interest credited of 360
A statement from City Building Society showing interest credited of 120 from an individual savings account
(ISA)
Dividend vouchers showing cash dividends received totalling 270
A letting agents statement showing taxable Schedule A rent of 820
An amount of 312 was paid to a registered charity under the gift aid scheme
Required:
(i) Calculate Tonys income tax payable for the tax year 200304. (11 marks)
(ii) State the two ways in which the Inland Revenue may collect any tax owing for the tax year 200304.
(3 marks)
(iii) Calculate Tonys total Class 1 national insurance contributions (NIC) for the tax year 200304.
(3 marks)
(iv) Calculate the total employers Class 1 and Class 1A NIC paid by Ads4U Ltd in respect of Tony for the
tax year 200304. (3 marks)
(b) Tonys wife Trudy is also employed by Ads4U Ltd earning in excess of 35,000 every year. During the tax year
200304 she received the following benefits:
A 2,000 cc commercial van, first registered in August 2002, used privately for 40% of the time. This was
made available for Trudys use for the whole of 200304. Ads4U Ltd paid for all of the running costs
including petrol, which amounted to 600 for the year.
A home entertainment system. This was first provided for Trudy to use at home on 6 April 2001, the date
it was purchased by her employer at a cost of 1,200. The system was given to Trudy to keep on 6 October
2003 when it was worth 300.
An allowance of 14 per night to cover miscellaneous expenses for overseas business trips totalling
80 nights.
Luncheon vouchers amounting to 336 in respect of 224 working days.
A mileage allowance of 55p per mile for the 6,000 business miles travelled by Trudy in her own car.
Required:
Calculate the total value of Trudys taxable benefits for the tax year 200304. (9 marks)
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(c) Trudy is 41 years old. She has never previously contributed to a personal pension plan, but feels it is now time
to think about her retirement.
Her net relevant earnings (NRE) for the past six tax years have been:
19981999 41,000
19992000 43,000
20002001 38,000
20012002 42,000
20022003 41,000
20032004 42,000
It is now 20 September 2004.
Required:
Advise Trudy of:
(i) The maximum amount that she may pay into a private pension plan for the tax year 200304.
(2 marks)
(ii) The latest date by which the premium must be paid. (1 mark)
(iii) How tax relief will be given for the contributions paid. (2 marks)
(34 marks)
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2 (a) UK Fabrics Ltd has no associated companies and has previously drawn up its accounts to 31 December each
year. During 2003 the company decided to change its permanent accounting year-end to 31 March.
The following information is provided in respect of the 15-month period of account ending 31 March 2004:
Turnover 3,410,000
Cost of sales (1,600,000)
Notes:
1. The profit shown is the gain, after accounting for depreciation, on the sale of an unwanted showroom for
267,000 in August 2003. The showroom had originally been purchased for 210,000 in October 1999.
The indexation factor for October 1999 to August 2003 is 0064.
2. The rent received is in respect of an office block leased to another UK resident company for 12,000 per
month. The unpaid amount is due in April 2004.
3. The amount of 28,000 comprises:
28,000
4. The tax written down value of plant and machinery qualifying for capital allowances as at 1 January 2003
was 280,000. During the 15 months ending 31 March 2004 the company purchased a machine for
40,000 on 14 May 2003 and a car (which is not a low emission car) for 9,000 on 2 February 2004.
An old machine, which had previously cost 5,000 in May 2002 was sold for 4,000 on 14 August 2003.
The company is classed as medium sized for capital allowances purposes.
Required:
For each of the two tax accounting periods comprising UK Fabric Ltds fifteen month period of account
ending 31 March 2004:
(i) Calculate the maximum capital allowances available. (5 marks)
(ii) Calculate the adjusted Schedule D Case I profit (after capital allowances). (6 marks)
(iii) Calculate the corporation tax payable. (8 marks)
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(b) You are a tax technician working for AccountsRUs, a small accountancy firm. Your line manager has asked you
to reply to a letter, received on 6 December 2004, from a new client.
The letter is from John Starr, the managing director of Help4U Ltd, a newly formed company situated in Leeds.
He has asked for advice on the value added tax (VAT) registration rules.
Required:
Draft a letter to John Starr giving brief details of the compulsory registration rules for VAT.
Your letter should include:
details of when compulsory registration for VAT is due;
the dates by which Customs and Excise must be notified of registration;
and
the effective date of registration.
(Details of voluntary registration for VAT and the rules on deregistration from VAT, are not required.)
Marks will be awarded for the style and presentation of your answer.
(8 marks)
(27 marks)
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3 (a) Amanda Perkins is 29 years old and is a UK resident. During the tax year 200304 she made the following
disposals of capital assets:
17 August 2003: Four acres of land were sold for a gross amount of 80,000. An auctioneers fee of 10% was
charged on the disposal. The land had been part of a ten-acre plot that had cost 120,000, in September 1999.
The market value of the remaining six acres was 240,000, in August 2003. The land has never been used as
a business asset.
15 November 2003: A house, which had never been her main residence, was sold for 290,000. It had cost
100,000 in May 1984 and had an indexed cost of 186,000 on 6 April 1998. The house has never been
used as a business asset.
14 January 2004: 2,000 shares in APC Ltd were sold for 3,500. Amandas purchases of APC Ltd shares have
been:
14 September 1993: 1,000 shares for 500
16 November 2000: 500 shares for 550
19 October 2003: 500 shares for 775
20 January 2004: 200 shares for 300
The indexed value of the FA 1985 pool on 6 April 1998 was 640.
The shares are classed as a business asset.
Amanda had a capital loss of 8,500 bought forward as at 6 April 2003.
Required:
Calculate Amandas net taxable gains for the tax year 200304. (You are not required to calculate the capital
gains tax payable.) (16 marks)
(b) Amandas father, Harry, owns a small shop, which he has always used as a business asset. It cost him 90,000
in October 1999.
On 14 February 2004 he sold the shop to Amanda for 115,000 when it had a market value of 185,000.
Required:
(i) Calculate Harrys chargeable gain on the disposal of the shop assuming that holdover relief is claimed
on the gift of the business asset. (4 marks)
(ii) State Amandas base cost for future capital gains tax purposes. (1 mark)
(21 marks)
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4 (a) Charles, Meg and Rodney have been in partnership for several years making up their accounts to 31 December
annually. Profits have always been shared equally after allocation of salaries of 10,000 and 8,000 to Charles
and Meg respectively and interest on capital of 5% to each of the three partners.
The partners have capital invested amounting to:
Charles 20,000
Meg 16,000
Rodney 12,000
On 30 June 2003 Rodney left the partnership and withdrew his capital to start his own business. The remaining
two partners continued with the same salaries and interest on capital, sharing any balance equally between
them.
Rodney had overlap profits of 6,000 available from the opening years of the partnership.
The adjusted profit of the partnership for tax purposes for the accounting year ending 31 December 2003 was
120,000.
Required:
(i) Calculate the profit share attributable to each partner for the accounting period ending 31 December
2003. (8 marks)
(ii) Calculate Rodneys Schedule D Case I profit for his final year of assessment. (2 marks)
(b) Rodney started his new business on 1 August 2003 and made up his first set of accounts for the period ended
31 March 2004.
He purchased a new factory for use in the business on 1 September 2003, which was taken into industrial use
immediately. The factory was purchased for 362,000.
The cost breakdown was:
Land 90,000
Factory structure 180,000
Legal fees 10,000
Tunnelling 12,000
Administration office 70,000
Total 362,000
Required:
(i) Calculate the allowable cost for industrial buildings allowance (IBA) purposes. (6 marks)
(ii) Calculate the IBA available for the accounting period ending 31 March 2004. (2 marks)
(18 marks)
End of Question Paper
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Answers
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ACCA Certified Accounting Technician Examination Paper T9(GBR) December 2004 Answers
Preparing Taxation Computations (UK Stream) and Marking Scheme
Marks
1 (a) (i) Tony Gray Tax payable 200304
Non
Savings Savings Dividend Total
Salary 38,460 0.5
Benefits 2,290 0.5
36,955
Savings 800 x 40% 320 0.5
Dividend 300 x 325% 97 0.5
9,402
Tax deducted at source:
Savings (70 + 90) 160 0.5
Dividend 30 0.5
PAYE 7,442 7,632 0.5
1,770
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(ii) The outstanding amount can be settled in one of two ways:
(1) Full settlement on or before 31 January 2005 1
(2) Collected by adjusting the 200506 tax code, provided that the tax return is received by the
Inland Revenue on or before 30 September 2004 2
Note: this method of collection can only be used if the amount owed is less than 2,000 3
(iii) Tony Gray Class 1 NIC
(30,940 4,615) x 11% 2,896 1.5
(38,460 30,940) x 1% 75 1.5
2,971
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(iv) Ads4U Ltd
Class 1 (38,460 4,615) x 128% 4,332 1.5
Class 1A 2,290 x 128% 293 1.5
4,625
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Marks
(b) Trudy Gray Benefits 200304
Van
Statutory benefit 500 1
Note: petrol is included in the van benefit 0.5
Entertainment system
600 2.5
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Total 34
2 (a) (i) Capital allowances UK Fabrics Ltd
P & M CAs
Pool
JanuaryDecember 2003
Balance b/fwd 280,000
Disposal 4,000 1
276,000
WDA x 25% 69,000 69,000 1
207,000
Purchase 40,000
FYA x 40% 16,000 16,000 1
Balance c/fwd 231,000
JanuaryMarch 2004
Balance b/fwd 231,000
Purchase (No FYA) 9,000 0.5
240,000
WDA x 25% x 3/12 15,000 15,000 1.5
Balance c/fwd 225,000
Total allowances 15,000 5
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Marks
(ii) Adjusted Schedule D Case I profits UK Fabrics Ltd
Note: legal fees on the renewal of a short lease and trade debt collection are allowable expenses 1
Split: JanDec JanMar
2003 2004
Adjusted profit (12:3) 1,135,200 283,800 1
Capital allowances (part (i)) 85,000 15,000 1
Adjusted Schedule D Case I profits 1,050,200 268,800
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(iii) Corporation tax payable UK Fabrics Ltd
JanDec JanMar
2003 2004
Schedule D Case I profit 1,050,200 268,800
Schedule A rent (accruals basis) 144,000 36,000 2
Chargeable gain (W1) 43,560 2
Profits chargeable to corporation tax 1,237,760 304,800
Tax payable:
JanuaryDecember 2003:
1,237,760 x 30% 371,328
(1,500,000 1,237,760) x 11/400 7,212
364,116 1.5
JanuaryMarch 2004:
304,800 x 30% 91,440
(375,000 304,800) x 11/400 1,930
89,510 1.5
Workings:
1. Gain
Proceeds 267,000
Cost 210,000
57,000
Indexation allowance
210,000 x 0064 13,440
43,560
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Marks
(b) AccountsRUs Ltd
Leeds
LS19 4PS
Tel: 01977 765432
8 January 2004
Reference: XXX
John Starr
Help4U Ltd
Leeds
LS23 5TH
Dear Mr Starr
VAT REGISTRATION
I reply to your letter of 6 January 2004 concerning the rules of compulsory VAT registration.
Compulsory registration is required when either one of the two tests outlined below is met:
(1) Within any continuous period, not exceeding 12 months, the cumulative taxable supplies exceed
the VAT threshold of 56,000 1
(2) Within any 30 day period alone it is expected that taxable supplies will exceed the VAT threshold of
56,000 1
In the case of (1) above you are required to notify Customs and Excise within 30 days of the end of the
qualifying period and in the case of (2) before the end of that 30 day period. 2
Registration will be effective in the case of (1) above from the end of the month following the month in
which the 56,000 was exceeded. In the case of (2) registration will be effective from the start of the
30 day period. 2
I hope this answers your queries but if I can be of any further assistance please do not hesitate to ring
me on the above number.
Yours sincerely
A Tax Technician
Presentation 2
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Marks
3 (a) Amanda Perkins Chargeable gains 200304
Land
Proceeds 80,000
Less fees (10%) 8,000
72,000 1
Cost
120,000 x
80,000
30,000 2
80,000 + 240,000
42,000
104,000 1
50 1
No taper relief
Matched with October 2003 (purchases since 6 April 1998 LIFO basis)
Proceeds 500/2,000 x 3,500 875
Cost 775
100 1
No taper relief
Matched with November 2000 (purchases since 6 April 1998 LIFO basis)
Proceeds 500/2,000 x 3,500 875
Cost 550
325 1
888 1.5
115,470
Annual exemption 7,900 1
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Marks
(b) (i) Harry Perkins Chargeable gain
95,000 1
Chargeable now
(115,000 90,000) 25,000 1.5
Total 21
4 (a) (i) Share of partnership profits
Charles Meg Rodney Total
JanuaryJune 2003
Salary 5,000 4,000 9,000 1
Interest on capital 500 400 300 1,200 1.5
Profit share 16,600 16,600 16,600 49,800 1.5
22,100 21,000 16,900 60,000
JulyDecember 2003
Salary 5,000 4,000 9,000 1
Interest on capital 500 400 900 1
Profit share 25,050 25,050 50,100 1
30,550 29,450 60,000
Total 52,650 50,450 16,900 120,000 1
8
(ii) Rodney Schedule D Case I assessment
200304 Balance of profit 16,900 1
Overlap profits 6,000 1
10,900
2
(b) (i) Allowable cost Industrial buildings allowance
202,000
Note:
Land is never allowed 1
Office 25% rule applies
70,000
x 100 2574%
272,000
more than 25% therefore not allowed 2
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(ii) Industrial buildings allowance available
4% x 202,000 = 8,080
8,080 x 8/12 = 5,387 2
Total 18
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Preparing Taxation
Computations
(UK Stream)
ACCA CERTIFIED ACCOUNTING TECHNICIAN EXAMINATION
ADVANCED LEVEL
TUESDAY 14 JUNE 2005
QUESTION PAPER
Time allowed 3 hours
ALL FOUR questions are compulsory and MUST be answered
Tax rates and allowances are on pages 35
Do not open this paper until instructed by the supervisor
This question paper must not be removed from the examination
hall
The Association of Chartered Certified Accountants
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The question paper begins on page 3.
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The following tax rates and allowances are to be used in answering the questions
Income Tax
Starting rate 12,020 10%
Basic rate 2,02131,400 22%
Higher rate 31,401 and above 40%
Note:
UK dividends will be taxed at 10% when they fall within the basic rate band and 325%
thereafter.
Personal allowance
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Capital allowances
%
Plant and machinery
Writing down allowance 25
First year allowance plant and machinery 40
information and communication
technology equipment
(until 31 March 2004) 100
low emission motor cars 100
For small businesses only: the rate of plant and machinery first-year allowance is increased to
50%. This applies for the period from 1 April 2004 to 31 March 2005 (6 April 2004 and
5 April 2005 for unincorporated businesses).
Industrial buildings
Writing down allowance 4
Corporation tax
Financial year 2004 2003
Starting rate 0% 0%
Small companies rate 19% 19%
Full rate 30% 30%
Starting rate lower limit 10,000 10,000
Starting rate upper limit 50,000 50,000
Small companies lower limit 300,000 300,000
Small companies upper limit 1,500,000 1,500,000
Marginal relief fraction:
Starting rate 19/400 19/400
Small companies rate 11/400 11/400
Marginal relief
(M P) x I/P x Marginal relief fraction
Value added tax
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Capital gains tax: taper relief
The percentage of the gain chargeable is as follows:
Complete years after 5 April Gains on Gains on
1998 for which asset held business assets non-business assets
% %
1 50 100
2 25 100
3 25 95
4 25 90
5 25 85
6 25 80
7 25 75
8 25 70
9 25 65
10 25 60
National insurance contributions
(not contracted-out rates)
%
Class 1 employee 14,745 per year Nil
4,74631,720 per year 110
31,721 and above per year 10
Class 1 employer 14,745 per year Nil
4,746 and above per year 128
Class 1A 128
Class 2 205 p.w.
Class 4 14,745 per year Nil
4,74631,720 per year 80
31,721 and above per year 10
All apportionments should be made to the nearest month.
Calculations and workings need only be made to the nearest .
All workings should be shown.
5 [P.T.O.
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ALL FOUR questions are compulsory and MUST be attempted
1 (a) Ravi Patel is a computer expert working for a UK resident company receiving an annual salary of 39,000.
During the tax year 200405 Ravi received the following benefits:
The use of a company owned apartment. This had cost the company 160,000 in May 2003 and has been
occupied by Ravi since that date. The apartment has an annual rateable value of 4,100 and Ravi pays the
company 2,500 per year for its use. The occupation of the apartment is not regarded as job-related.
Furniture, valued at 12,000, is provided for use in the apartment. During 200405 the company paid
decorating bills of 550 and wages to a cleaner amounting to 1,500.
A 20 litre diesel BMW car, with a CO
2
emission rate of 209g per km and a recommended list price of
26,500. This was first provided for Ravis use in July 2003. Accessories amounting to 800 were added
when the car was first provided. Ravi contributed 4,000 towards the capital cost of the car. The car is used
20% for business use and 80% for private use. The company pays for all the fuel but Ravi contributes 40
per month towards this cost.
In addition to the above the company also paid 750 to the local golf club in respect of Ravis 200405
membership and refunded 1,325 to Ravi in respect of actual business expenses incurred whilst he was away
on official trips.
Ravi had agreed with the company that it would deduct 20 a month during the whole of 200405 in respect
of charitable payments under the payroll deduction scheme.
Ravi paid 234 (net) per month to a private pension plan. In February 2005 he paid an additional lump sum
of 2,340 (net) to the same plan. In December 2004 he paid 180 fees to an Inland Revenue approved
professional body related to his employment.
Ravi paid tax of 7,808 under the PAYE system for 200405.
In addition to the above Ravi received the following income during 200405:
Bank interest of 240
Building society interest of 190
Dividends from shares held in UK companies amounting to 280
Dividends from investments held in an Individual Savings Account
(ISA) amounting to 145.
The above amounts are all stated at the cash amounts received.
Required:
Calculate the income tax payable by Ravi for the tax year 200405. (23 marks)
(b) Ravis wife, Neha, started her own business on 1 October 2002. Her first sets of adjusted profits after capital
allowances were:
Period to 30 April 2003 18,680
Year to 30 April 2004 18,720
Year to 30 April 2005 22,080
Required:
(i) Calculate Nehas Schedule D Case I profits for her first three years of assessment. You are not required
to calculate any overlap profit. (5 marks)
(ii) Calculate Nehas total national insurance contributions for 200405. (3 marks)
(iii) State when the income tax for 200405 will be paid and how each payment will be calculated. You are
not required to calculate the actual amount of each payment. (3 marks)
(34 marks)
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2 (a) Thompson Brothers Ltd is a UK resident company with no associated companies. Up to 2004 the company had
always made up its accounts to 31 March annually but because of new accounting policies the company decided
to change its accounting date to 31 December.
The adjusted trading profit before capital allowances for the 9-month period ended 31 December 2004 was
256,663
Other income and expenditure received and paid in the same period was:
Income:
Dividends from UK companies 18,000
Rental income (note 1) 10,000
Debenture interest (note 2) 3,000
Capital profit (note 3) 26,000
Expenditure:
Interest for late payment of tax 2,000
Gift aid payment to a UK registered charity 7,000
Notes:
1 The rent was received in two equal amounts on 1 April 2004 and 1 October 2004 and was in each case
in respect of the following six months.
2 Debenture interest is received six monthly on 31 March and 30 September each year and is in respect of a
holding of 120,000 5% Loan Stock.
3 The profit shown is in respect of an unused office block purchased for 60,000 in December 2003 and
sold for 86,000 in October 2004. (Indexation factor December 2003 October 2004: 0028).
A capital loss of 4,000 was brought forward as at 1 April 2004.
The company purchased a new factory in September 2004 for 150,000, which included 30,000 for land.
The company has not claimed rollover relief.
The tax written down value on the companys plant and machinery pool as at 1 April 2004 was 140,000.
During the period ended 31 December 2004 the company purchased plant for 80,000 and a new car (which
is not a low emission car) for one of the directors private use at a cost of 22,000. An old machine, which had
originally cost 28,000, was sold for 23,000 in November 2004.
The company is classified as medium sized for capital allowances purposes.
Required:
(i) Calculate Thompson Brothers Ltds total capital allowances for both plant and machinery and industrial
buildings for the nine-month period ended 31 December 2004. (7 marks)
(ii) Calculate the corporation tax payable by Thompson Brothers Ltd for the nine-month period ended
31 December 2004. (11 marks)
(b) Parker plc is a large UK resident company. In its accounting year ended 31 March 2005 it had estimated its
profits chargeable to corporation tax (PCTCT) to be 1,600,000. The company had PCTCT amounting to
1,800,000 in the year to 31 March 2004.
Required:
In respect of the chargeable accounting period ended 31 March 2005.
(i) Calculate the corporation tax payable. (1 mark)
(ii) State the due dates of payment of the tax and the amount of each of those payments. (4 marks)
(23 marks)
7 [P.T.O.
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3 (a) Fiona Banks is a UK resident and had the following transactions in capital items during 200405:
14 June 2004 Sold a factory for 228,000. This had originally been purchased in May 1993 for 120,000
and had been enlarged at a cost of 35,000 in August 2001. The indexed cost of the factory on 6 April 1998
was 138,240. The factory has always been used as a business asset.
11 November 2004 Sold a painting for 9,870. Auctioneers fees of 10% were payable on this amount. The
painting had been purchased in June 1998 for 2,500. It has never been used as a business asset.
Fiona had unused capital losses brought forward on 6 April 2004 amounting to 3,400.
Fionas statutory total income (STI) for 200405 was 33,570.
Required:
Calculate the capital gains tax payable by Fiona for the tax year 200405. (10 marks)
(b) Jane Bush purchased a non-business asset in September 1999 for 18,000. It was destroyed by a flash flood
in November 2004. Jane replaced the asset in March 2005 at a cost of 28,000 having received 29,500
compensation from an insurance company.
Required:
(i) Calculate the chargeable gain arising in 200405 (3 marks)
(ii) State the base cost of the replacement asset. (1 mark)
(c) Peter Stone purchased his main residence on 1 July 1984 for 54,500. He moved into the property immediately
and occupied it until he moved abroad to take up employment on 1 September 1986. He returned to the UK
and reoccupied the property on 1 May 1991. He remained in the property until 1 January 1992 when he moved
to another UK city on a temporary work secondment. On 1 January 1997 he returned to the property. On the
1 March 1999 he moved to his parents home to take care of his sick mother. The property was finally sold on
1 July 2004. Peter never returned to the property after 1 March 1999.
Required:
Using a tabular format state, giving reasons in each case, the deemed and actual periods of occupation and
the periods of non-occupation of the property. (8 marks)
(22 marks)
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4 (a) Susan Chance runs a small business from home which she commenced in 1996. Her recent adjusted trading
results (after capital allowances) have been;
Year ended 31 December 2002 12,500
Year ended 31 December 2003 (15,000) loss
Year ended 31 December 2004 3,400
Susan had other income of 8,000 in 2002-03, 4,000 in 200304 and 26,000 in 200405.
She has written to you asking for advice on the use of the 2003 trading loss.
Required:
Write a letter to Susan, using any fictitious addresses, advising her on the use of the loss. Your letter should
provide details of:
the years in which the loss can be used;
the income it can be used against; and
three planning points to consider when deciding which claim to make.
(Note you are not required to make a final decision or to show any calculations). (8 marks)
Presentation (2 marks)
(b) Monty Finch has been trading for the last three years. His annual sales have recently exceeded the VAT threshold
of 58,000 but he has failed to notify Customs and Excise.
Required:
State the amount(s) of late notification penalty that could be applied. (5 marks)
(c) Bob Hawkes operates a jewellery business and is registered for VAT. He received an order for a silver and
diamond necklace on 14 May 2004. A deposit of 350 was received with the order. The order was completed
and delivered on 16 July 2004. An invoice was raised and despatched on 20 July 2004 and the final (balancing)
payment was received on 31 August 2004.
Bob does not operate the cash accounting scheme.
Required:
State how the tax point for VAT purposes is determined and the date(s) which will apply in this case.
(6 marks)
(21 marks)
End of Question Paper
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Answers
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ACCA Certified Accounting Technician Examination Paper T9(GBR) June 2005 Answers and
Preparing Taxation Computations (UK Stream) Marking Scheme
Marks
1 (a) Ravi Patel Income tax for 200405
Non
Savings Savings Dividend Total
Salary 39,000 05
Benefits (w1) 22,360
61,360
Payroll giving scheme
(20 x 12) 240 1
Professional fees 180 1
56,195
Savings 537 x 40% 215 05
Dividends 311 x 325% 101 05
57,043 15,712
Less tax paid:
Dividend (10%) 31 05
Interest (20%) 107 05
PAYE 7,808 7,946 05
Tax payable 7,766
Workings
Apartment
Rateable value 4,100 05
Additional
(160,000 75,000) x 5% 4,250 1
8,350
Contribution 2,500 0.5
5,850
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14
Marks
Furniture
12,000 x 20% 2,400 1
Car
Percentage:
CO
2
emission 209
base level 145 05
64
divided by five 12 05
base level 15 05
27
Diesel addition 3 05
30%
23,300
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(b) (i) Neha Schedule D Case I profits
200203 Actual
1 Oct 02 05 Apr 03
6/7 x 8,680 7,440 2
200304 1st 12 months
1 Oct 02 30 Sept 03
8,680 + (5/12 x 18,720) 16,480 2
200405 CYB
Yr ended 30 Apr 04 18,720 1
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Marks
(iii) Neha Dates of payment
31 January 2005 1
Calculated as 50% of the tax for 200304
31 July 2005 1
31 January 2006 Balance of amount due for 200405 1
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PCTCT 220,196
FII (18,000 x 100/90) 20,000 1
Profits 240,196
Tax payable:
220,196 x 30% 66,059 1
(1,125,000 240,196) x
220,196
x 11/400 22,306 1
240,196
43,753
Workings:
Thresholds: 1,500,000 x 9/12 1,125,000
300,000 x 9/12 225,000 1
Gain:
Proceeds 86,000 05
Cost 60,000 05
26,000
Indexation allowance
60,000 x 0028 1,680 05
24,320 11
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Marks
3 (a) Fiona Banks Capital gains tax for the tax year 200405
Factory:
Proceeds 228,000 05
Indexed cost 138,240 1
Extension 35,000 05
54,760
8,883
Cost 2,500 05
6,383
7,876
Tax payable:
Basic rate band left:
31,400 (33,570 4,745) = 2,575 x 20% 515 1
Remainder 5,301 x 40% 2,120 05
7,876 2,635
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Proceeds 29,500
Cost 18,000
11,500
Chargeable now 1,500 (not reinvested)
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18
Marks
(ii) Base cost of replacement:
Cost 28,000
Deferred 10,000
18,000 1
4 (a)
A Technician
Anyplace
Anywhere
SP10 5BN
01794 32163
Reference: XXX
Susan Chance
At Home
Somewhere
SN 78 6 DX
Dear Susan
USE OF TRADING LOSS
Thank you for your letter requesting advice on the use of your trading loss.
There are three main ways in which you may use the loss:
(i) using the loss in the same tax year that it was made (i.e. 200304) against any other income in that
year; or
(ii) using the loss in the previous tax year (i.e. 200203) again against any other income in that year; or 3
(iii) using the loss in future years but only against income from the same trade.
In the cases of (i) and (ii) the use of the loss is optional and requires you to make an election. The loss can be
used in either year in any order as you may stipulate but if a claim is made it must be for either the amount
of the loss or the amount of your other income whichever is the lower. 2
In the case of (iii) no claim is required because the use of the loss is compulsory where either no current or
previous years claims are made or there is some loss remaining after these claims.
When deciding on which option to use you should consider the following points:
preserving your personal allowance;
saving tax at the highest marginal rate; 3
using the loss as soon as possible.
If you require any further assistance please do not hesitate to contact me on the above number.
Yours sincerely
A Technician
presentation 2
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Marks
(b) Monty Finch VAT penalties
Late notification penalties are a percentage of the net VAT due from the date Monty should have been
registered until the date when notification is made: 1
Up to 9 months late: 5% of net VAT due
Between 9 and 18 months late: 10% of net VAT due
Over 18 months late: 15% of net VAT due 3
A minimum of 50 applies in each case 1
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Preparing Taxation
Computations
(UK Stream)
ACCA CERTIFIED ACCOUNTING TECHNICIAN EXAMINATION
ADVANCED LEVEL
TUESDAY 13 DECEMBER 2005
QUESTION PAPER
Time allowed 3 hours
ALL FOUR questions are compulsory and MUST be answered
Tax rates and allowances are on pages 35
Do not open this paper until instructed by the supervisor
This question paper must not be removed from the examination
hall
The Association of Chartered Certified Accountants
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This is a blank page.
The question paper begins on page 3.
2
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The following tax rates and allowances are to be used in answering the questions
Income Tax
Starting rate 12,020 10%
Basic rate 2,02131,400 22%
Higher rate 31,401 and above 40%
Note:
UK dividends will be taxed at 10% when they fall within the basic rate band and 325%
thereafter.
Personal allowance
Notes:
1. The wages figure includes 8,500 for Fredas son who worked only three hours a week for the whole of the
year ended 31 March 2005. The normal rate for these duties is 5 per hour.
2. The electricity and insurance both include private use of 20%.
3. Freda uses the computer at home for private work and estimates this to be 25% of the total usage.
4. Fredas capital allowances claim for the year is 2,500.
Required:
Calculate Fredas adjusted Schedule D Case I profit for the year ended 31 March 2005. (6 marks)
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(c) Imogens brother Sebastian has previously run a sole trader business but due to falling profits decided to cease
trading on 31 March 2005. His adjusted profits for his final three accounting periods were as follows:
Year to 31 October 2003 12,000
Year to 31 October 2004 8,000
5 months to 31 March 2005 3,000
Unused overlap profits from the opening years of his business amounted to 6,000.
Required:
Calculate Sebastians Schedule D Case I assessments for all of the tax years affected by the above results.
(3 marks)
(17 marks)
End of Question Paper
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Answers
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17
ACCA Certified Accounting Technician Examination Paper T9 (GBR) December 2005 Answers and
Preparing Taxation Computation (UK stream) Marking Scheme
Marks
1 (a)
Pay and Payne
Winchester
Tel: 01962 888889
1 March 2005
Reference: XXXX
Newco Ltd
Winchester
Dear Sir
PAYE PROCEDURES
Thank you for your recent letter asking for assistance with the PAYE end of year procedure rules.
The Revenue requires the following forms to be completed and submitted by the dates indicated.
A form P14 must be completed for each employee showing the amount of pay, tax and national insurance
for the year. This is to be completed in triplicate with two copies going to the Revenue and one being given to
the employee. The employee copy is called a form P60. These forms must be submitted to the Revenue by
19 May and to the employee by 31 May after the year end. 3
A form P35 must be submitted at the same time as the forms P14. A form P35 is simply a list of all of the
forms P14. 1
Finally if benefits have been given to any employee then either a form P9D for those earning less than
8,500 or a form P11D for those earning 8,500 or more in a year must be completed for each employee
showing the value of those benefits given. These forms are completed in duplicate with one copy going to the
Revenue and the other to the employee both by 6 July following the year end. 2
If I can be of further assistance please do not hesitate to contact me on the above number.
Yours faithfully
H Knowles
Tax Technician
Presentation 2
Medical insurance
Cost to the employer 560 1
Workplace parking
Exempt tax free benefit 1
Bonus 12,000 1
Benefits 12,400 05
Tutorial note: Private use is ignored when calculating capital allowances for a company.
(b) Blue Ltd Loss relief
(i) Year to 9 months to Year to Year to
31 December 30 September 30 September 30 September
2001 2002 2003 2004
Schedule D Case I 70,000 80,000 40,000 1
Loss carried forward (s.393(1)) (40,000) 1
Schedule A 12,000 9,000 12,000 12,000 1
Chargeable gain 10,000 05
82,000 99,000 12,000 12,000
Current year loss (s393A(1)) (12,000) 1
Loss carried back (s.393A(1)) (20,500) (99,000) 25
Gift aid (2,000) (2,000) 1
Profits chargeable to corporation tax 59,500 Nil Nil 10,000 8
(ii) Unrelieved charges 2,000 2,000 1
Loss memo
180,000
September 2003 (12,000)
September 2002 (99,000)
December 2001 (20,500) (82,000 x 3/12)
September 2004 (40,000)
1,072,000
Charge on income
Gift aid payment (4,000) 05
Profits 1,098,000
Total 26
3 (a) Nigel Hawksworth Chargeable gains for 200405
Vase
Exempt proceeds and cost < 6,000 1
House
Proceeds 240,000
Indexed cost (140,000)
100,000 1
Shares
Disposals are deemed to occur on a LIFO basis, thus:
Shares Cost
2,600 1
500 1
38,000 1
Chargeable now
(amount not reinvested) (8,000) 1
Total 22
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Marks
4 (a) Imogen Tombay VAT for the quarter ended 31 October 2004
Output tax:
Sales 98,000 x 95% x 175% 16,293 15
Input tax:
Purchases 42,000 x 175% 7,350 1
Electricity 1,100 x 7/47 164 1
Accounting fees 500 x 7/47 74 1
Computer expenses 140 x 7/47 21 1
Bad debt 300 x 175% 53 (7,662) 1
VAT payable 8,631 05
8
Notes:
1. Full discount is always taken into account
2. The bad debt of 400 is not 6 months old
(b) Freda Tombay Adjusted Schedule D Case I profit
Net profit per accounts 195,100 05
Deduct interest received (7,500) 05
Add back:
Wages for son (note 1) 7,720 1
Electricity (2,400 x 20%) 480 1
Insurance (540 x 20%) 108 1
Computer expenses
(860 x 25%) 215 1
Drawings 34,500 43,023 05
230,623
Less capital allowances (2,500) 05
228,123 6
Note 1:
Wages allowed are 15 x 52 weeks = 780
Therefore disallowed amount to be added back: 8,500 780 = 7,720
(c) Sebastian Tombay Final years of assessments
200304 Current year basis Year ended 31 October 2003 12,000 1
Total 17
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Preparing Taxation
Computations
(UK Stream)
ACCA CERTIFIED ACCOUNTING TECHNICIAN EXAMINATION
ADVANCED LEVEL
TUESDAY 13 JUNE 2006
QUESTION PAPER
Time allowed 3 hours
ALL FOUR questions are compulsory and MUST be answered
Tax rates and allowances are on pages 35
Do not open this paper until instructed by the supervisor
This question paper must not be removed from the examination
hall
The Association of Chartered Certified Accountants
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The following tax rates and allowances are to be used in answering the questions
Income Tax
Starting rate 12,090 10%
Basic rate 2,09132,400 22%
Higher rate 32,401 and above 40%
Note:
UK dividends will be taxed at 10% when they fall within the basic rate band and 325%
thereafter.
Personal allowance
21,810
Payroll giving scheme
(30 x 5) (150) 1
Professional fee (150) 1
34,800
Next 8,815 x 40% 3,526 05
43,615
Savings 1,550 x 40% 620 05
Dividend 300 x 325% 97 05
11,648
Tax deducted at source:
Bank interest (20%) 150 05
Building society interest(20%) 80 05
Debenture interest (20%) 80 05
Dividend (10%) 30 05
PAYE 3,300 (3,640) 05
8,008
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Marks
Workings
w1
Medical cover
Cost to company 720 x 7/12 420 1
Luncheon vouchers
15p a day tax free
155 15p x 150 days 210 1
Computer
4,800 x 20% x 7/12 560 1
1st 500 (500) 60 1
Total benefits 690
w2
Trading profit
200506 (Final year)
25,000 + 4,000 29,000 15
Overlap profit (2,000) 27,000 1
22
2,505
3,728
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Marks
2 (a) Yellow Ltd Capital allowances for the period ended 31 December 2005
FYA General Expensive Expensive SLA SLA
pool car (1) car (2) (1) (2)
Balances b/forward 86,000 4,500 4,000
Purchases:
2 May 18,000 05
14 June 26,000 05
1 September 20,000 05
Disposals:
19 June (3,000) 05
16 July (2,400) 05
1 December (6,000) 05
83,000 (1,500) 26,000 1,600 18,000
Balancing allowance (1,600) 1
Balancing charge 1,500 1
WDA 25% x 8/12 (13,833) 1
WDA 3,000 x 8/12 (2,000) 1
FYA 40% (8,000) (7,200) 2
540,000
3 months to 31 March 2006
WDA 25% x 3/12 (33,750) 1
506,250
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(c) Purple Ltd Corporation tax computation for the year ended 31 March 2006
Small company with non-corporate dividends
Underlying rate of tax:
7,125 2
7,125
x 100 1781% 1
40,000
Tax payable:
24,000 x 19% 4,560
16,000 x 1781% 2,850
40,000 7,410 2
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3 (a) (i) Paul Capital gains tax for the tax year 200506
Farm land
Proceeds 90,000
Expense of selling (1,000)
89,000 1
Cost:
54,000 x
90,000
(18,000) 2
90,000 + 180,000
71,000
76,580
Loss 2,200
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Marks
Summary:
Gains 71,000 76,580
Loss (2,200) 1
68,800 76,580
Taper 85% 25%
Chargeable gains 58,490 19,145 1
Total 77,625
Annual exemption (8,500) 1
69,125
Proceeds 245,000 1
Indexed cost at 6 April 1998 (100,640) 1
144,360
Chargeable now:
120,000 80,000 (40,000) 1
104,360 1
140,640 1
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Marks
4 (a) Carol, Wendy and Bob Partnership taxable income
Year to 31 January 2006
Carol Wendy Bob Total
Salary 10,000 10,000 1
Interest (4%) 1,600 800 400 2,800 15
Balance (3:1:1) 40,320 13,440 13,440 67,200 15
51,920 14,240 13,840 80,000
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Preparing Taxation
Computations
(UK Stream)
ACCA CERTIFIED ACCOUNTING TECHNICIAN EXAMINATION
ADVANCED LEVEL
TUESDAY 12 DECEMBER 2006
QUESTION PAPER
Time allowed 3 hours
ALL FOUR questions are compulsory and MUST be answered
Tax rates and allowances are on pages 35
Do not open this paper until instructed by the supervisor
This question paper must not be removed from the examination
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The following tax rates and allowances are to be used in answering the questions
Income Tax
Starting rate 12,090 10%
Basic rate 2,09132,400 22%
Higher rate 32,401 and above 40%
Note:
UK dividends will be taxed at 10% when they fall within the basic rate band and 325%
thereafter.
Personal allowance
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Capital allowances
%
Plant and machinery
Writing down allowance 25
First year allowance plant and machinery 40
low emission motor cars (CO
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emissions of less
than 120 grams per kilometre) 100
For small businesses only: the rate of plant and machinery first-year allowance was increased
to 50% for the period from 1 April 2004 to 31 March 2005 (6 April 2004 and 5 April 2005
for unincorporated businesses).
Industrial buildings
Writing down allowance 4
Corporation tax
Financial year 2004 2005
Starting rate 0% 0%
Small companies rate 19% 19%
Full rate 30% 30%
Starting rate lower limit 10,000 10,000
Starting rate upper limit 50,000 50,000
Small companies rate lower limit 300,000 300,000
Small companies rate upper limit 1,500,000 1,500,000
Marginal relief fraction:
Starting rate 19/400 19/400
Small companies rate 11/400 11/400
From 1 April 2004 profits paid out as dividends are subject to a minimum rate of corporation
tax of 19%.
Marginal relief
(M P) x I/P x marginal relief fraction
Value added tax
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Capital gains tax: taper relief
The percentage of the gain chargeable is as follows:
Complete years after 5 April Gains on Gains on
1998 for which asset held business assets non-business assets
% %
1 50 100
2 25 100
3 25 95
4 25 90
5 25 85
6 25 80
7 25 75
8 25 70
9 25 65
10 25 60
National insurance contributions
(not contracted-out rates)
%
Class 1 employee 14,895 per year Nil
4,89632,760 per year 110
32,761 and above per year 10
Class 1 employer 14,895 per year Nil
4,896 and above per year 128
Class 1A 128
Class 2 210 per week
Class 4 14,895 per year Nil
4,89632,760 per year 80
32,761 and above per year 10
All apportionments should be made to the nearest month.
Calculations and workings need only be made to the nearest .
All workings should be shown.
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ALL FOUR questions are compulsory and MUST be attempted
1 (a) Simon was born on 14 May 1954 and is a manager working for Able plc, a large UK resident company.
In 200506 Simon received a gross salary of 70,000 and on 16 February 2006 he received a bonus of
11,500 based on Able plcs results for the year ended 31 December 2005.
In addition Simon received the following benefits in 200506:
The use of a company car. The car was a 2000cc petrol driven Audi with a CO
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emission rate of 198 grams
per kilometre. The recommended list price was 28,000, but Able plc paid 24,000 because of a company
discount scheme. Accessories to the value of 6,000 were added at the time that Simon took delivery of the
vehicle, which was on 6 July 2005. The company paid for all of the running costs, including the fuel, which
amounted to 4,500 for the period to 5 April 2006. Simon used the car for both business and private use.
Able plc did not provide Simon with the use of any other car before 6 July 2005.
The use of a company owned house. The house was used permanently by Simon and his family from
6 October 2005. The house had been purchased by the company for 120,000 in May 1998 and had a
market value when Simon moved in of 250,000. The annual rateable value of the house was 8,000 and
Simon paid 600 a month to the company for the use of the property. Simon paid for all of the household
expenses. The house is not classed as job-related.
The use of furniture. Whilst he occupied the above property the company provided Simon with the use of
furniture, which had a market value of 10,000.
Workplace parking. Simon was provided with a free car parking space in a public car park adjacent to his
place of work. This cost the company 540 for the year ending 5 April 2006.
General business expenses. Simon received an amount of 6 a day for 80 days of business trips in the UK
and 9 a day for 60 days of business trips abroad. All of these trips required overnight stays away from home
and the amounts paid were used to cover the costs of incidental expenses such as newspapers and telephone
calls home.
Simon contributes 5% of his gross salary (excluding benefits and bonuses) into Able plcs HMRC approved
occupational pension scheme every year.
In addition, Able plc deducted the following amounts from Simons salary in 200506:
Income tax (PAYE) 23,150
Class 1 national insurance contributions 3,517
Simons other income for 200506 was:
Bank interest 3,600
Dividends from UK companies 900
Dividends from shares held in an
Individual Savings Account (ISA) 270
All amounts shown are the actual cash amounts received or credited to the account.
Simon paid 312 (net) to a UK registered charity and a 210 annual fee to an HMRC approved relevant
professional body, required for his position in the company, in 200506.
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Required:
Calculate the income tax payable by Simon for the tax year 200506. (23 marks)
(b) Simon is considering purchasing a property and letting it out. He has heard that there are tax advantages if the
property is treated as a furnished holiday letting and has written to you, his local tax advisor, for information.
Required:
Write a letter to Simon, using fictitious addresses, explaining the conditions, which must be met for a
property to be treated as a furnished holiday let and the tax advantages this would have for Simon.
Marks will be awarded for the style and presentation of your answer. (11 marks)
(34 marks)
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2 (a) Broad Ltd is a UK resident company. It owns 80% of Thin Ltd, another UK company. During its accounting year
ended 31 March 2006 Broad Ltd made a net trading profit of 1,240,000. Included in this figure (which has
not yet been adjusted for tax purposes) were:
Income:
UK dividends (note 1) 18,000
Bank interest (note 2) 4,300
Profit on the sale of a fixed asset (note 3) 84,000
Expenses:
Debenture interest (note 4) 5,000
Gift aid payment to a UK registered charity 10,000
Patent royalties (note 5) 14,600
Legal fees (note 6) 10,000
Payments for loss of office (note 7) 230,000
Notes:
1. None of the dividends were received from Thin Ltd.
2. The bank interest was the total amount due for the year in respect of amounts deposited.
3. The profit on the sale of a fixed asset resulted from the sale of an office building for 140,000 in May 2005.
The building had been purchased in September 1996 for 56,000. The indexation factor for the period
September 1996 to May 2005 is 0.241.
4. The debenture interest represents the amount payable on an issue of 100,000 5% loan stock in 2004,
used to purchase a new item of plant, which is used in the trade.
5. The patent royalties paid are in respect of trading activities.
6. The legal fees comprise 8,000 for obtaining a 60-year lease on a new factory and 2,000 for staff
employment contracts.
7. The payments for loss of office are in respect of redundancy payments made to ensure the business
continues. The statutory redundancy payments made totalled 120,000 and the balance of 110,000 was
in respect of ex-gratia payments.
8. The balance on the general plant and machinery pool for capital allowances purposes on 1 April 2005 was
328,000. There were no purchases or disposals of plant and machinery during the year ended 31 March
2006.
9. Broad Ltd had a capital loss of 18,000 brought forward at 1 April 2005.
10. Broad Ltd has always paid corporation tax at the full rate.
Required:
(i) Calculate the trading profit adjusted for tax purposes, for Broad Ltd, for the year ended 31 March 2006;
(6 marks)
(ii) Calculate the profits chargeable to corporation tax (PCTCT) and the corporation tax payable by Broad
Ltd for the year ended 31 March 2006; (7 marks)
(iii) Assuming that the figure calculated in (ii) above was estimated correctly at the beginning of the year,
state the due date(s) of payment and the amount due on each date, of Broad Ltds corporation tax for
the year ended 31 March 2006; (4 marks)
(iv) State the date by which Broad Ltds self-assessment corporation tax return must be filed; (1 mark)
(v) State how long Broad Ltd must keep its corporation tax records for, for the year ended 31 March 2006,
assuming that in respect of that year HMRC do not make any enquiries. (1 mark)
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(b) Broad Ltd is registered for VAT.
Required:
State four types of expenditure on which the input VAT payable by a registered trader is treated as blocked
and therefore irrecoverable. (4 marks)
(23 marks)
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3 (a) Patrick made the following disposals of assets in the tax year 2005-06:
19 May 2005: 6,000 shares in ABC plc were sold for proceeds of 23,400.
Patricks record of purchases of ABC plc shares is as follows:
14 June 1997 4,000 shares for 8,400
19 August 2000 1,000 shares for 1,600
22 September 2004 2,000 shares for 4,900
24 May 2005 1,000 shares for 4,400
The indexed cost at 6 April 1998 of the shares purchased in June 1997 was 8,670.
5 August 2005: An oil painting was sold for 5,800. The oil painting had been purchased in May 1999 for
6,500.
2 December 2005: A building was sold for 160,000. The building had been purchased in August 1994 for
82,000. An extension had been added in May 1999 at a cost of 19,000. The 6 April 1998 indexed cost of
the building was 92,170.
None of the above assets were business assets.
Patricks taxable income for 2005-06 was 30,400.
Required:
(i) Calculate the capital gains tax payable by Patrick for 200506; (18 marks)
(ii) State the due date of payment of the capital gains tax calculated in (a)(i) above. (1 mark)
(b) Patricia sold her pottery business in October 2005 for 240,000. Her only assets had been her workshop, which
had cost 40,000 in June 1999 and which had a value of 160,000 at the date of the sale, and goodwill,
which had been created since the business started in 1999.
In December 2005 Patricia used 210,000 of the proceeds to purchase a retail shop, which qualifies as a
business asset.
Required:
(i) Calculate Patricias chargeable gain (before the annual exemption) for the tax year 200506 on the
assumption that Patricia always claims any reliefs available; (5 marks)
(ii) State the base cost of the retail shop for capital gains tax purposes. (1 mark)
(25 marks)
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4 (a) Norman has been in business as a sole trader since 1988. He runs his business from a small factory, which cost
175,000 on 1 October 1996. The factory had been purchased new, was taken into immediate industrial use
on the day it was purchased and has been used continuously for industrial purposes ever since.
The 175,000 cost consisted of the following elements:
Land 35,000
Groundwork and tunnelling 27,000
Drawing office 10,000
Administration office 8,000
Factory 90,000
Legal fees (for the factory) 5,000
175,000
Norman sold the factory on 31 January 2006 for total sale proceeds of 190,000, including 60,000 for the
land.
Norman makes his accounts up annually to 31 March.
Required:
Calculate Normans maximum industrial buildings allowances (IBA) for all years of entitlement including any
balancing adjustment in the year of disposal. (8 marks)
(b) In the tax year 2004-05 Normans final income tax liability was 8,600. In 2005-06 his final income tax liability
is expected to be 10,400.
Required:
State the date(s) on which Normans 200506 income tax liability is due and calculate the amounts which
are payable on each of these date(s). (6 marks)
(c) For the tax year 2005-06 Norman had taxable trading income of 42,000.
Required:
Calculate the total national insurance contributions (NICs) payable by Norman for the tax year 200506.
(4 marks)
(18 marks)
End of Question Paper
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Answers
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ACCA Certified Accounting Technician Examination Paper T9(GBR) December 2006 Answers
Preparing Taxation Computations (UK Stream) and Marking Scheme
Marks
1 (a) Simon Income tax payable 200506
Total Non-savings Savings Dividend
Income
Salary 70,000 05
Bonus 11,500 05
Benefits (see workings) 15,693 125
97,193
Occupational pension (5% x 70,000) (3,500) 1
Professional fees (210) 05
32,800
Next 55,788 x 40% 22,315 05
88,588
Savings 4,500 x 40% 1,800 05
Dividend 1,000 x 325% 325 05
31,405
Less tax deducted at source:
Savings (20%) 900 05
Dividend (10%) 100 05
PAYE 23,150 (24,150) 05
Tax payable 7,255 23
Workings benefits
Total
Car CO
2
emission 198
Base figure (140)
58 05
Final percentage 26
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House The house is more than six years old when Simon first occupied it, therefore
the market value at occupation is used.
16,750
4,775 4,775
Parking Exempt 1
Expenses UK trips exempt level is 5 per night. As payment
is above this the full amount is taxable.
6 x 80 480 480 15
sub total to page fifteen 125
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Marks
2 (a) (i) Broad Ltd Adjusted trade profit year ended 31 March 2006
Net profit per accounts 1,240,000 05
Less:
UK dividends 18,000 05
Interest 4,300 05
Capital profit 84,000 (106,300) 05
1,133,700
add back:
Gift aid payment 10,000 05
Legal fees (lease) 8,000 18,000 05
1,151,700
less capital allowances (328,000 x 25%) (82,000) 1
(ii) Broad Ltd Corporation tax for the year ended 31 March 2006
Adjusted trade profit 1,069,700 05
Investment income 4,300 05
Capital gain (w1) 70,504
less loss brought forward (18,000) 52,504 1
1,126,504
Charge on income:
Gift aid (10,000) 05
Profits 1,136,504
84,000
Indexation allowance
0241 x 56,000 (13,496) 1
70,504 7
Total 23
3 (a) (i) Patrick Capital gains tax for the tax year 200506
Gains
Shares: Shares must be matched as follows:
Those purchased in the next 30 days i.e. 24 May 2005
Those purchased since 5 April 1998 on a LIFO basis i.e. 22 September 2004
19 August 2000
Shares in FA85 pool 1
1,000
May 2005 Proceeds x 23,400 3,900
6,000
Cost (4,400)
(500) 15
2,000
September 2004 Proceeds x 23,400 7,800
6,000
Cost (4,900)
2,900 15
2,300 15
3,465 2
(500) 15
48,830 2
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19
Summary of gains Marks
Losses taken from gains with the least taper relief entitlement
Gain Losses Net Taper % Net of
of losses taper relief
2,900 (1,000) 1,900 nil 1,900 1
2,300 2,300 90 2,070 1
3,465 3,465 70 2,425 1
48,830 48,830 70 34,181 1
40,576
Annual exemption (8,500)
1
32,076
Tax payable:
Basic band remaining is (32,400 30,400) = 2,000 1
2,000 x 20% 400 05
(32,076 2,000) x 40% 12,030 05
12,430
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(ii) Due date of payment: 31 January 2007 1
40,000 1
Total 25
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4 (a) Norman Industrial buildings allowance Marks
Allowable cost:
Groundwork 27,000 05
Drawing office 10,000 05
Factory 90,000 05
Legal fees 5,000 05
Administration office 8,000*
140,000
89,600
31 March 2006
Proceeds (130,000) 1
nil
8
10,400
Total 18
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Preparing Taxation
Computations
(UK Stream)
ACCA CERTIFIED ACCOUNTING TECHNICIAN EXAMINATION
ADVANCED LEVEL
TUESDAY 12 JUNE 2007
QUESTION PAPER
Time allowed 3 hours
ALL FOUR questions are compulsory and MUST be answered
Tax rates and allowances are on pages 24
Do not open this paper until instructed by the supervisor
This question paper must not be removed from the examination
hall
The Association of Chartered Certified Accountants
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The following tax rates and allowances are to be used in answering the questions
Income tax
Starting rate 12,150 10%
Basic rate 2,15133,300 22%
Higher rate 33,301 and above 40%
Note:
UK dividends will be taxed at 10% when they fall within the basic rate band and 325%
thereafter.
Personal allowance
114,640
Less expenses:
Wages and salaries 3 67,590
Lighting and heating 4 720
Rates 5 2,000
Depreciation vehicles 400
machinery 600
Loan to a former employee written off 180
Bank overdraft interest 140
Donations 6 300
Legal fees 7 700
Motor car expenses 8 2,580
Miscellaneous expenses 9 930
Loss on sale of machinery 200
(76,340)
Notes:
1. The interest received is the amount due on cash deposited with a local building society.
2. The rental income represents the amount received on a small workshop let to another trader. The annual
rent due is 4,800 and the tenant paid the 400 outstanding amount in March 2007.
3. Wages and salaries comprise the following:
67,590
Emily works 16 hours a week for 40 weeks a year. Other staff on similar contracts receive 650 per hour.
4. Leon and Emily live in a flat above the business premises. HM Revenue and Customs (HMRC) have agreed
that 60% of the total heating and lighting cost incurred had been used in the flat and 40% in the business.
5. Rates comprise the following:
2,000
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6. Donations during the year were made to the following:
300
7. Legal fees comprise 400 for trade debt collection and 300 for legal work regarding the collection of the
outstanding rent.
8. Motor car expenses comprise the following:
2,580
HMRC has agreed that the motorcar running costs are to be split 70% for private use and 30% for business
use.
9. Miscellaneous expenses comprise the following:
Advertising 300
Telephone calls (all business) 400
Gifts to customers
(bottles of whisky costing 1150 each) 230
930
10. Capital allowances for the period have been calculated as 2,400.
11. Leon took goods from stock for his own use. These goods had cost 1,400 and this amount is included in
the purchases total, but has not been included in the sales total. The profit margin on these goods is 20%
of the selling price.
Required:
Calculate Leons adjusted trading profit for the year ended 31 October 2006. (14 marks)
(b) Leons understanding of national insurance contributions (NIC) is very poor. He knows he must account for and
pay NIC in respect of himself and his staff but does not know how to do this.
All of his staff are paid monthly and none receive any benefits.
Required.
List the classes of national insurance contributions (NIC) that Leon must account for, for both himself and
his staff. In each case state on what income they are calculated and by when they should be paid to HMRC.
Note: You are not required to calculate the actual amounts of NIC due.
(8 marks)
(22 marks)
End of Question Paper
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Answers
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ACCA Certified Accounting Technician Examination Paper T9(GBR) June 2007 Answers
Preparing Taxation Computations (UK Stream) and Marking Scheme
Marks
1 (a) (i) Stephen Income tax payable for the tax year 200607
Total Non-savings Savings
income income
Salary 47,000 47,000 05
Benefits 2,400 2,400 05
Bonus 4,000 4,000 1
Pension contributions (47,000 x 5%) (2,350) (2,350) 1
Employment income 51,050 51,050
Bank interest (240 x 100/80) 300 300 1
Building society interest (760/2 x 100/80) 475 475 1
National savings certificate interest exempt 1
Statutory total income 51,825 51,050 775
Personal allowance (5,035) (5,035) 05
Taxable income 46,790 46,015 775
Company pension contributions exempt benefit 05
Tax payable:
1st 2,150 x 10% 215 05
Next 31,150 x 22% 6,853 05
33,300
Next 13,490 x 40% 5,396 05
46,790 12,464
Less tax deducted at source:
Savings 775 x 20% (155) 1
PAYE (11,100) 05
Tax payable 1,209 10
(ii) Rebecca Income tax payable for the tax year 200607
Total Non-savings Savings
income income
Salary 40,700 40,700 05
Benefits 2,000 2,000 05
Employment income 42,700 42,700
Bank interest (160 x 100/80) 200 200 1
Building society interest (720/2 x 100/80) 475 475 1
43,375 42,700 675
Patent royalties (780 x 100/78) (1,000) (1,000) 1
Statutory total income 42,375 41,700 675
Personal allowance (5,035) (5,035) 05
Taxable income 37,340 36,665 675
Extension of basic rate band 33,300 + (8% x 42,700) = 36,716 1
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Marks
1st 2,150 x 10% 215 05
Next 34,515 x 22% 7,593 05
36,665
Savings 51 x 20% 10 05
36,716
Savings 624 x 40% 250 05
37,340 8,068
Add tax retained on patent royalties:
1,000 x 22% 220 1
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Marks
(c) Simon Lease deduction
Amount taxable on landlord:
Premium 16,000
2% (16 1) x 16,000 (4,800) 2
Simons deduction:
11,200 = 700 per annum 1
16 4
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2 (a) Beach Ltd Capital allowances for the year ended 31 December 2006
FYA General Expensive Short life CAs
pool car asset
Balances brought forward 28,000 05
Purchases:
Car 18,800 1
Computer (4,935 x 40/47) 4,200 1
Van (15,275 x 40/47) 13,000 1
Disposals:
Machine (7,050 x 40/47) (6,000) 1
13,000 22,000 18,800 4,200
WDA 25% (5,500) (3,000) 8,500 15
FYA 40% x 4,200 (1,680) 1,680 1
FYA 50% x 13,000 (6,500) 6,500 1
Transfer (6,500) 6,500
Balances carried forward 23,000 15,800 2,520
Capital allowances 16,680 8
1,150 wasted
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Marks
(c) Sea, Sand and Surf Ltd Value added tax for the quarter ended 31 December 2006
Output tax:
Standard rated sales 120,000 x 175% 21,000 1
Input tax:
Purchases of goods for resale 58,000 x 175% 10,150 1
Electricity 3,525 x 7/47 525 1
Accountants fees 1,410 x 7/47 210 1
Bad debts 600 x 175% 105 (10,990) 1
VAT payable 10,010 05
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3 (a) Aaron Capital gains tax for the tax year 200607
Bronze statuette:
Proceeds 7,200
Cost (4,100)
3,100 1
Restricted to:
(7,200 6,000) x 5/3rds 2,000 15
No taper relief owned for less than three years
Gift of shares:
Proceeds 143p* x 12,000 17,160
Cost (6,600)
10,560 1
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Marks
(b) (i) Adele Compensation receipt
Proceeds 29,000
Cost (24,500)
4,500
Chargeable now (amount not reinvested) (1,000)
Cost 28,000
Deferred (3,500)
24,500 1
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Marks
4 (a) Leon Adjusted trading profit for the year ended 31 October 2006
Net profit per accounts 38,300 05
Deduct:
Interest received (240) 05
Rent received (4,400) 1
33,660
Add back:
Wages Drawings (Leon) 26,500 05
Emily (w1) 832 1
Lighting and heating (720 x 60%) 432 05
Council tax 800 05
Depreciation (600 + 400) 1,000 1
Loan to former employee written off 180 05
Donations Oxfam 200 05
Legal fees outstanding rent collection 300 05
Car expenses:
Parking fees (Leon) 120 05
Running costs (2,400 x 70%) 1,680 05
Miscellaneous Gifts 230 05
Loss on sale of machinery 200 32,474 05
66,134
Goods for personal use (1,400 x 100/80) 1,750 1
67,884
Capital allowances (2,400) 05
Items unadjusted
Staff salaries 05
Employers NIC 05
Business rates 05
Church donation 05
Trade debt collecting 05
Staff fines 05
Advertising/Telephones 05
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Working 1
Paid 4,992
Equivalent amount due:
(16 x 40) x 650 per hour (4,160)
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Certified Accounting Technician Examination
Advanced Level
Time allowed
Reading and planning: 15 minutes
Writing: 3 hours
ALL FOUR questions are compulsory and MUST be attempted.
Tax rates and allowances are on pages 35.
Do NOT open this paper until instructed by the supervisor.
During reading and planning time only the question paper may
be annotated. You must NOT write in your answer booklet until
instructed by the supervisor.
This question paper must not be removed from the examination hall.
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Preparing Taxation
Computations
(UK Stream)
Tuesday 11 December 2007
The Association of Chartered Certified Accountants
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This is a blank page.
The question paper begins on page 3.
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Supplementary Instructions
1. Calculations and workings need only be made to the nearest .
2. All apportionments should be made to the nearest month.
3. All workings should be shown.
Tax Rates and Allowances
The following tax rates and allowances are to be used in answering the questions
Income tax
Starting rate 12,150 10%
Basic rate 2,15133,300 22%
Higher rate 33,301 and above 40%
Note:
UK dividends will be taxed at 10% when they fall within the basic rate band and 325%
thereafter.
Personal allowance
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Capital allowances
%
Plant and machinery
Writing down allowance 25
First year allowance plant and machinery 40
low emission motor cars (CO
2
emissions of less
than 120 grams per kilometre) 100
For small businesses only: the rate of plant and machinery first-year allowance was increased
to 50% for the period from 1 April 2006 to 31 March 2007 (6 April 2006 and 5 April 2007
for unincorporated businesses).
Industrial buildings
Writing down allowance 4
Corporation tax
Financial year 2004 2005 2006
Small companies rate 19% 19% 19%
Full rate 30% 30% 30%
Small companies rate lower limit 300,000 300,000 300,000
Small companies rate upper limit 1,500,000 1,500,000 1,500,000
Marginal relief fraction: 11/400 11/400 11/400
Marginal relief
(M P) x I/P x marginal relief fraction
Value added tax
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Capital gains tax: taper relief
The percentage of the gain chargeable is as follows:
Complete years after 5 April Gains on Gains on
1998 for which asset held business assets non-business assets
% %
1 50 100
2 25 100
3 25 95
4 25 90
5 25 85
6 25 80
7 25 75
8 25 70
9 25 65
10 25 60
National insurance contributions
(not contracted-out rates)
%
Class 1 employee 15,035 per year Nil
5,03633,540 per year 110
33,541 and above per year 10
Class 1 employer 15,035 per year Nil
5,036 and above per year 128
Class 1A 128
Class 2 210 per week
Class 4 15,035 per year Nil
5,03633,540 per year 80
33,541 and above per year 10
Where weekly or monthly calculations are required the Class 1 limits shown above should
be divided by 52 (weekly) or 12 (monthly) as applicable.
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ALL FOUR questions are compulsory and MUST be attempted
1 (a) Mary works for AB(UK) Ltd, a large UK resident company, and earns an annual gross salary of 50,000. During
the tax year 200607 she received the following benefits:
A loan to help her purchase a yacht. AB(UK) Ltd advanced her 40,000 on 6 April 2006 and charged her
interest at the rate of 1% per annum. Mary repaid 8,000 of the loan on 6 July 2006, but the remaining
32,000 remains outstanding.
Use of a 1600 cc diesel Vauxhall car, with a CO
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emission rate of 196 grams per kilometre and a
recommended list price of 15,000. The car was first provided to Mary on 6 September 2006 for both her
private and business use. The private usage is 40% and the business usage 60%. The company pays for
all the running costs of the vehicle, which amounted to 1,800 for the period to 5 April 2007. Mary was
required to contribute 20 per month towards the private use of the car and 10 per month towards the
cost of private fuel.
Use of a home cinema system. This was first provided to Mary to use at home on 6 April 2003, the date it
was purchased by AB(UK) Ltd at a cost of 4,000. The system was gifted to Mary outright on 5 April 2007,
when it was worth 900.
Occupational pension contributions amounting to 4,000 during 200607. These were paid by AB(UK)
Ltd, on Marys behalf.
Required:
(i) Calculate the total value of benefits provided to Mary for the purposes of income tax, for the tax year
200607. (16 marks)
(ii) State which HM Revenue and Customs (HMRC) form AB(UK) Ltd is required to complete to report these
benefits and the date by which it should be submitted. (2 marks)
(b) Marys husband Patrick has worked for AB(UK) Ltd since 2004 and he has provided you with the following
information regarding his income and outgoings for the tax year 200607:
Income
A gross salary of 65,000.
A bonus of 8,000, received in May 2006, in respect of the companys accounting year ended
31 December 2005. A bonus of 10,000 was received in May 2007 in respect of AB(UK) Ltds accounting
year ended 31 December 2006.
Taxable benefits with a value for tax purposes of 4,350.
Dividends received from UK companies of 1,800.
Interest credited to his bank account of 2,400.
Interest received from national savings certificates of 400.
Premium bond prizes received of 1,500.
Expenditure
Pension contributions paid to AB (UK) Ltds HMRC approved occupational pension scheme of 400 per
month.
A donation of 780 (net) paid to a UK registered charity in August 2006 under the gift aid scheme.
Tax, amounting to 21,400, for 2006-07 was deducted from Patricks employment income by PAYE.
Required:
Calculate the income tax payable by Patrick for the tax year 200607. (11 marks)
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(c) Patrick and Mary have two children, Anita aged 14 and Gregory aged 19.
Anitas only income in the tax year 200607 was 500 (net) interest received from savings invested in a building
society account.
Gregorys only income for the tax year 200607 was dividends of 360 from shares held in a UK company.
Neither Patrick nor Mary provided the capital, which generated the above amounts of income.
Required:
State the tax refund (if any) due to Anita and Gregory respectively for the tax year 200607, giving reasons
why a refund is due or is not due. (3 marks)
(32 marks)
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2 (a) United plc is a UK resident company. It owns 80% of City Ltd, 62% of Rovers plc and 40% of Wanderers Ltd.
During its accounting year ended 31 March 2007 United plc made a trading profit, fully adjusted for tax
purposes but before the deduction of capital allowances, of 256,000
United plc has provided you with the following additional information for the year ended 31 March 2007:
4,000 shares in Town Ltd were sold for 40,000 on 17 May 2006. United plc had purchased Town Ltd
shares as follows:
3,000 shares in May 1997 for 6,000
5,000 shares in August 2004 for 18,000
The total holding represented less than 1% of Town Ltds issued share capital.
The following indexation factors are to be used:
May 1997 to August 2004: 0194
August 2004 to May 2006: 0042
United plc received dividends of 9,000 from Wanderers Ltd.
Rental income of 12,000 was receivable for the year, of which 3,000 was still outstanding as at
31 March 2007.
Bank interest of 1,600 was received. This was the full amount receivable for the year ended 31 March
2007.
Interest of 600 was paid in respect of money borrowed for non-trade purposes. This was also the full
amount due for the year ended 31 March 2007.
The balance on the general pool for capital allowance purposes on 1 April 2006 was 126,000.
A new machine costing 40,000 was purchased on 14 May 2006. This was to replace an unwanted
machine, which had cost 18,000 in September 1997, and which was sold for 6,000 in June 2006.
A car costing 24,000 was purchased for use by the finance director in August 2006. This car is used 40%
for private purposes and 60% for business purposes. The car is not a low-emission car.
United plc is classed as a small business for the purposes of capital allowances.
Required:
(i) Calculate the capital gain on the disposal of the Town Ltd shares on 17 May 2006. (4 marks)
(ii) Calculate the maximum capital allowances that United plc can claim for the year ended 31 March 2007.
(5 marks)
(iii) Calculate the corporation tax payable by United plc for the year ended 31 March 2007. (9 marks)
(iv) State the due date of payment of the corporation tax calculated in (iii) above. (1 mark)
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(b) Athletic Ltd is a small UK registered company, which is not yet registered for value added tax (VAT). The company
started to trade on 1 December 2007 and its forecast total sales for the periods shown are expected to be:
1 December 2007 to 29 February 2008 15,000
1 March 2008 to 31 May 2008 21,000
1 June 2008 to 31 August 2008 42,000
You should assume that all sales are made evenly throughout the periods shown.
The above figures are exclusive of VAT.
Required:
(i) State the date by which Athletic Ltd will have to notify HM Revenue and Customs (HMRC) of its need
to register for VAT. Include workings to support your answer. (3 marks)
(ii) State the date by which Athletic Ltd will be compulsorily registered for VAT. (1 mark)
(iii) On the assumption that Athletic Ltd only makes standard rated sales and does not join the annual
accounting scheme, state the length of the companys normal VAT return period and by when the VAT
return must be received by HMRC. (2 marks)
(25 marks)
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3 (a) Donald made the following disposals of assets in the tax year 200607:
14 June 2006: 4,000 shares in XYZ plc were sold for 18,000. Donalds record of purchases of XYZ plcs shares
is as follows:
14 October 2000 4,000 shares for 6,000
18 May 2004 A 1 for 2 rights issue at 250 per share was taken up in full
19 November 2006: A cricket bat, signed by the English cricket squad, was sold for 5,800. It had been
purchased for 3,500 in September 2005.
2 February 2007: A house, which had never been Donalds main residence, was sold for 340,000. It had been
purchased in May 1996 for 125,000 and had been extended at a cost of 28,000 in August 1997. A second
extension costing 36,000 was added in July 2004. The indexed cost of the house (including the first extension)
on 6 April 1998 was 161,600.
None of the above assets were business assets.
Required:
Calculate Donalds chargeable gains (after taper relief) for the tax year 200607. (10 marks)
(b) Caroline has taxable income, after the deduction of her personal allowance, for the tax year 200607 of
33,000.
Caroline disposed of four assets during the tax year 2006-07 with the following results:
Date sold Date purchased Gain/loss
Business asset 1 14 May 2006 2 June 1997 40,000 gain
Business asset 2 17 November 2006 15 March 1999 (4,000) loss
Non business asset 1 14 January 2007 12 August 2001 3,000 gain
Non business asset 2 23 March 2007 8 June 1997 2,000 gain
In addition, Caroline has unused capital losses brought forward as at 6 April 2006 amounting to 3,000.
Required:
(i) Calculate the capital gains tax payable by Caroline for the tax year 200607. (7 marks)
(ii) State the due date of payment of the tax calculated in (i) above. (1 mark)
(c) Bernadette is a sole trader. On 14 September 2006 she sold an asset, which had always been used in her
business, to her brother Billy, for 26,000. The asset had cost Bernadette 18,000 in August 1999 and it had
a market value on 14 September 2006 of 45,000.
Required:
(i) Calculate Bernadettes chargeable gain (after taper relief) on the disposal of the asset, assuming that
Bernadette and Billy make any beneficial claims or elections to reduce the tax payable on the gift.
(4 marks)
(ii) State the capital gains tax base cost of the asset for Billy. (1 mark)
(23 marks)
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4 (a) Bobby started in business as a sole trader on 1 February 2004. His first set of accounts were made up for the
sixteen month period ending 31 May 2005. Accounts were made up annually thereafter. His adjusted trading
profits after capital allowances for his first three accounting periods were as follows:
Period to 31 May 2005 24,000
Year to 31 May 2006 36,000
Year to 31 May 2007 46,000
Required:
(i) Calculate Bobbys assessable profits for the first four tax years of his business, clearly stating the basis
periods that apply. (5 marks)
(ii) Calculate the amount of overlap profits for all of the tax years covered in (i) above. (2 marks)
(b) On the first day of his business, 1 February 2004, Bobby purchased a second hand factory to carry on his
manufacturing trade. He paid 80,000 to the original owner, who had purchased the factory on 1 September
2000 for 70,000. The factory has always been used for a qualifying manufacturing purpose.
Required:
Calculate how much industrial buildings allowance (IBA) Bobby would have been able to claim for the
accounting period ended 31 May 2005. (4 marks)
(c) Bobby is about to employ his first salesman. The salesmans salary will be 36,000 per year and he will be given
the use of a company car, which has a taxable benefit of 3,200. Bobby knows there is a requirement to
calculate and account for national insurance contributions (NIC) but is not sure how to do so in this case.
The salesman will be not-contracted out for the purposes of NIC and will be paid a gross monthly salary of
3,000.
Bobby has written to you, his tax adviser, requesting details of his NIC obligations in respect of the salesman.
Required:
Write a letter to Bobby, using fictitious addresses, explaining:
the classes of NIC suffered by both Bobby, as employer, and the salesman, as employee;
the amount of NIC that will be suffered in each case (calculated on a monthly basis where applicable);
and,
the dates by which any NIC due will be payable to HM Revenue and Customs (HMRC).
Note: You are NOT required to calculate Bobbys own personal NIC liability, only the NIC suffered in respect
of Bobby as an employer and that of the salesman, as employee.
Marks will be awarded for the style and presentation of your answer.
(9 marks)
(20 marks)
End of Question Paper
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Answers
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ACCA Certified Accounting Technician Examination Paper T9 (UK) December 2007 Answers
Preparing Taxation Computations (United Kingdom) and Marking Scheme
Marks
1 (a) (i) Mary Benefits 2006-07
Loan
Average method
40,000 + 32,000
= 36,000
2
36,000 x (5% 1%) = 1,440 15
1,360 2
Mary would choose to be taxed on the figure calculated using the lower 1,360 05
strict statutory method
Car
CO
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emission 196
Base figure (140)
56 05
Final percentage 29
2,398 2,398
or
Original cost 4,000
less 20% for:
200304 (800)
200405 (800)
200506 (800)
200607 (800)
800 2
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(ii) AB (UK) Ltd must submit form P11D to HM Revenue and Customs (HMRC) in respect of Mary by
6 July 2007 2
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Marks
(b) Patrick Income tax payable 200607
Total Non-savings Savings Dividends
income income
Salary 65,000 05
Bonus 8,000 05
Benefits 4,350 05
77,350
Pension contributions (400 x 12) (4,800) 1
34,300
Next 33,215 x 40% 13,286 05
Savings 3,000 x 40% 1,200 05
Dividend 2,000 x 325% 650 05
Anita can claim the refund because this is actual tax deducted at source by Anitas bank. 05
Gregory
360 x 100/90 400
Personal allowance (5,035)
Gregory cannot reclaim the dividend tax credit of 40 (400 x 10%). This is because the tax
credit on a dividend is a deemed credit and has not actually been deducted by the company,
and therefore has not been paid by Gregory. 1
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Marks
2 (a) (i) United plc Capital gain 17 May 2006
FA85 pool
Shares Cost Indexed
cost
May 1997 purchase 3,000 6,000 6,000 05
Indexed to August 2004
0194 x 6,000 1,164 05
August 2004 purchase 5,000 18,000 18,000 05
8,000 24,000 25,164
Indexed to May 2006
0042 x 25,164 1,057 05
8,000 24,000 26,221
May 2006 disposal (4,000) (12,000) (13,111) 1.0
4,000 12,000 13,110
Gain
Proceeds 40,000
Cost (12,000) 05
28,000
Indexation allowance (13,111 12,000) (1,111) 05
26,889
(ii) United plc Capital allowances for the year ended 31 March 2007
FYA General Expensive Capital
pool car allowances
Balance brought forward 126,000 05
Purchases:
Machine 40,000 05
Car 24,000 05
Disposals:
Machine (6,000) 05
40,000 120,000 24,000
WDA 25% (30,000) 30,000 1
WDA restricted (3,000) 3,000 1
FYA 50% (20,000) 20,000 1
Transfer to pool (20,000) 20,000
Balances carried forward Nil 110,000 21,000
Total capital allowances 53,000
Profits 252,889
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Marks
The tax limits are divided by the number of associated companies three (United plc, City Ltd and
Rovers plc but not Wanderers Ltd)
1,500,000
500,000
3
300,000
100,000 15
3
Therefore, United plc is a marginal rate company
66,340 9
(iv) The date of payment is 1 January 2008 (9 months and 1 day after the end of the accounting period) 1
(b) (i) & (ii) Athletic Ltd Registration for value added tax (VAT)
64,000 2
Athletic Ltd will then be compulsorily registered on the 1st day of the month following the month in
which the threshold was exceeded (or an earlier date if requested) i.e. 1 September 2008. 1
(iii) The normal length of a VAT return period is three calendar months. 1
The return must be sent to HMRC by the end of the month following the end of the return period. 1
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Marks
3 (a) Donald Chargeable gains for the tax year 200607
Shares Shares Cost
10,667 1
Cricket bat
Exempt
Chattel bought and sold for less than 6,000 1
House
Proceeds 340,000
April 1998 indexed cost (161,600) 1
July 2004 extension (36,000) 1
142,400
(note: the August 1997 extension is reflected in the April 1998 indexed cost)
Total gains for 200607: (9,067 + 92,560) 101,627 05
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(b) (i) Caroline Capital gains tax for the tax year 200607
Business Non Non
asset 1 business business
asset 1 asset 2
Gain 40,000 3,000 2,000
Current year loss (3,000) (1,000) 1
Brought forward loss (2,000) (1,000) 1
Net gains 38,000 nil nil
Taper percentage 25% 85% 65% 15
Chargeable gains 9,500 nil nil 05
Annual exemption (8,800) 1
300 x 20% 60 05
400 x 40% 160 05
220 7
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Marks
(ii) The date of payment is 31 January 2008 1
27,000
Chargeable now (26,000 18,000) (8,000) 1
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200304 3,000
200405 18,000
200506 18,000
200607 36,000
75,000 1
Actual profit in the periods ended
31 May 2006 (60,000)
Note: Other methods of calculating and illustrating the calculation of the overlap profits are acceptable.
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(b) Bobby Industrial buildings allowance period ended 31 May 2005
Calculated on:
Lower of cost or second-hand price: 70,000 1
Remaining tax life: 21 years 7 months (259 months) 1
WDA
70,000
x 12 = 3,243 per year
1
259
IBA for period ended 31 May 2005: 3,243 x 16/12 = 4,324 1
263 15
330 1
In addition your liability to class 1A contributions on the benefits will be 410 (3,200 x 128%). 1
If you need any further assistance please do not hesitate to contact me at the above address.
Yours sincerely
An Advisor
Presentation 2
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Certified Accounting Technician Examination
Advanced Level
Time allowed
Reading and planning: 15 minutes
Writing: 3 hours
ALL FOUR questions are compulsory and MUST be attempted.
Tax rates and allowances are on pages 35.
Do NOT open this paper until instructed by the supervisor.
During reading and planning time only the question paper may
be annotated. You must NOT write in your answer booklet until
instructed by the supervisor.
This question paper must not be removed from the examination hall.
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Preparing Taxation
Computations
(UK Stream)
Tuesday 10 June 2008
The Association of Chartered Certified Accountants
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This is a blank page.
The question paper begins on page 3.
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Supplementary Instructions
1. Calculations and workings need only be made to the nearest .
2. All apportionments should be made to the nearest month.
3. All workings should be shown.
Tax Rates and Allowances
The following tax rates and allowances are to be used in answering the questions
Income tax
Starting rate 12,230 10%
Basic rate 2,23134,600 22%
Higher rate 34,601 and above 40%
Note:
UK dividends will be taxed at 10% when they fall within the basic rate band and 325%
thereafter.
Personal allowance
Notes:
(1) The loan interest income is in respect of 5% debentures purchased in 2005 as a long-term investment. The
amount shown includes an accrued figure of 2,000 for an amount still owed to the company at
31 December 2007.
(2) The legal expenses comprise:
Costs of defending the companys title to a fixed asset 6,000
Fine for breaking the Health and Safety at Work Act 10,000
Legal fees for preparing staff contracts 4,000
(3) Included within the administration costs are:
Gifts of 300 Christmas food hampers to customers 11,500
Entertainment of staff 2,600
(4) The loan interest paid is in respect of a loan of 100,000 borrowed to finance the purchase of fixed plant
and machinery used in ACC Ltds trade. The loan was obtained in 2004. The total amount due for the period
ended 31 December 2007 is as shown in the accounts.
(5) Motoring expenses include:
Parking fines incurred by employees on company business 300
Directors car expenses of which 40% is in respect of private journeys 2,400
Lease payments for the car used by the commercial manager
for the eight-month period. 6,000
(The list price of the car, which is not low emission, is 20,000).
(6) The donations comprise: 2,000 to a national charity; and 5,000 to the local Chamber of Commerce.
(7) The pension contributions are in respect of contributions to a HM Revenue & Customs (HMRC) registered
occupational pension plan for the companys employees.
(8) The tax written down values of the general plant and machinery pool and an expensive car as at 1 May
2007 were 290,000 and 16,000 respectively. The car is the car (in note 5) used by the director.
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The following purchases and disposals of capital items were made by the company during the period ended
31 December 2007:
Purchases:
31 May 2007 New machinery costing 35,000.
17 August 2007 A new computer costing 6,000 (to be treated as a short life asset).
Disposals:
12 June 2007 Machinery for 14,000 (original cost 12,000).
In addition to the above, the expensive car, which had originally cost 19,000, was traded in on 31 December
2007 for 8,000 against the cost of a new car, for which a further 3,000 was paid by the company. The new
car is not a low emission car and will not be used for private journeys.
ACC Ltd qualifies as a small company for capital allowances purposes.
Required:
(i) Calculate the maximum capital allowances claimable by ACC Ltd for the eight-month period ended
31 December 2007. (8 marks)
(ii) Calculate ACC Ltds adjusted trading profits, after capital allowances, for the eight-month period ended
31 December 2007. (11 marks)
(b) BDD Ltd is a UK trading company, which has always paid tax at the full rate. For its accounting year ended
31 March 2008 BDD Ltd had profits chargeable to corporation tax (PCTCT) amounting to 1,800,000. This
amount was identical to the figure of profits forecast at the beginning of April 2007.
Required:
Calculate the amount of corporation tax due by BDD Ltd and state the due dates of payment of the tax paid
in respect of the year ended 31 March 2008. (5 marks)
(24 marks)
9 [P.T.O.
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3 (a) Alberto, a UK resident, made the following disposals of capital assets during the tax year 200708:
14 May 2007: A statuette of a French musketeer was sold for 18,000. The statuette had been part of a set of
three, which had been purchased on 10 January 2005 for a total cost of 32,000. Alberto incurred selling
expenses of 1,000. The market value of the remaining two statuettes on 14 May 2007 was 45,000.
19 July 2007: A painting was sold for 3,000. The painting had been purchased in June 2005, when it was
mistakenly thought to be a rare portrait, for 9,000.
22 January 2008: 6,000 shares in EFG Ltd were sold for 38,000. Alberto had purchased 4,000 shares in
September 2002 for 5,600. EFG Ltd had made a 1 for 1 bonus issue to its shareholders in May 2004. The
shares in EFG Ltd should be regarded as business assets for taper relief purposes.
Alberto had unused capital losses of 1,000 brought forward from the tax year 200607.
Albertos taxable income (after personal allowances) for the tax year 200708 was 33,900.
Required:
(i) Calculate the capital gains/losses (before taper relief) arising on each of the above disposals;
(7 marks)
(ii) Calculate the capital gains tax payable by Alberto for the tax year 200708 and state the due date of
payment. (8 marks)
(b) Sandra has run a small manufacturing business for several years.
On 16 August 2007 she sold a factory, which had always been used in her business, for 220,000. It had
originally been purchased in May 2002 for 140,000.
On 10 June 2007 Sandra had invested 210,000 in fixed plant and machinery, which was to be used in her
business.
Sandra wishes to claim all available reliefs.
Required:
(i) Calculate Sandras chargeable gain (after taper relief) on the disposal of the factory; (3 marks)
(ii) State when any deferred gain will become chargeable. (3 marks)
(21 marks)
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4 (a) Sean and Lauren have been in partnership for several years making up accounts to 31 December every year.
On 1 January 2007 Helena was admitted as a full partner.
Prior to 1 January 2007 profits and losses had always been shared equally but from 1 January 2007 the profit
sharing ratio was changed to 2:2:1 between Sean, Lauren and Helena respectively.
No salaries or interest on capital are paid.
Recent adjusted trading profits have been:
Year to 31 December 2006 18,000
Year to 31 December 2007 25,000
Required:
For each partner calculate the trading profit assessable to tax for each of the tax years 200607 and
200708, clearly identifying any overlap profits. (6 marks)
(b) Nicole has been trading as a sole trader for several years. For the accounting year to 31 August 2007 she made
an adjusted trading loss, after capital allowances, of 18,000.
Prior to this year Nicole has always made a profit and she expects to make profits in all future years.
In addition to her income as a sole trader, Nicole receives investment income of approximately 3,000 every
year.
Required:
In respect of Nicoles loss for the year ended 31 August 2007, state the tax years in which the loss can be
used and the type(s) of income it can be used against in each case.
Note: you are not required to calculate the effect of any use of the loss or suggest the best alternative.
(7 marks)
(c) Yee-ling is a sole trader and has recently registered for value added tax (VAT).
Yee-ling understands that it is important to use the correct deemed date of sale i.e. the tax point. Recently she
sold stock for 3,000. A 400 payment in advance had been received on 28 May 2007 and the stock was
delivered on 24 June 2007. Yee-ling sent an invoice for the balance due of 2,600 on 2 July 2007 and received
this amount from the customer on 1 August 2007.
Yee-ling is not in the cash accounting scheme.
Required:
(i) State how the tax point (time of supply) is determined for the purposes of VAT; (3 marks)
(ii) State, giving reasons, the tax point(s) in respect of the above transaction made by Yee-ling; (2 marks)
(iii) Give two reasons why it is important to determine the right tax point. (2 marks)
(20 marks)
End of Question Paper
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Answers
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ACCA Certified Accounting Technician Examination Paper T9 (UK) June 2008 Answers
Preparing Taxation Computations (United Kingdom) and Marking Scheme
Marks
1 (a) Paul Income tax payable for the tax year 200708
Total Non-savings Savings Dividends
income income
Employment income (working) 52,862 52,862 10
Bank interest (4,800 x100/80) x 50% 3,000 3,000 15
Dividends (1,800 x 100/90) 2,000 2,000 1
ISA interest exempt 1
Total income 57,862 52,862 3,000 2,000
Personal allowance (5,225) (5,225) 05
Taxable income 52,637 47,637 3,000 2,000
Extension of basic rate threshold 34,600 + (156 x 100/78) = 34,800 1
Tax payable:
1st 2,230 x 10% 223 05
Next 32,570 x 22% 7,165 05
34,800
Next 12,837 x 40% 5,135 05
47,637
Savings 3,000 x 40% 1,200 05
Dividends 2,000 x 325% 650 05
Working
Employment income
Salary 42,000 05
Bonus receipts basis 5,000 1
Accommodation
Rateable value 3,000 05
Additional
(159,000 75,000) x 625% 5,250 15
8,250
Contribution 400 x 12 (4,800) 3,450 1
Benefit 192
53,242
Professional fees (380) 1
Employment income 52,862 10
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Marks
(b) Charlie Business property income for the tax year 200708
Rent receivable:
1 April 2007 31 December 2007 800 x 9 7,200 1
1 January 2008 31 March 2008 880 x 3 2,640 9,840 15
Expenditure:
Bad debt (December 2007) 800 1
Contents insurance (600 x 9/12) + (800 x 3/12) 650 1
Estate agents commission (9,840 x 10%) 984 05
Repairs 250 05
Water rates 300 05
Porch expenditure not allowed capital 05
Wear and tear allowance (9,040 300) x 10% * 874 (3,858) 15
Business property income 5,982 8
* The 10% wear and tear allowance is calculated on the net rent received but marks will be awarded where
the amount receivable is used.
(c) Meeting notes
(1) The maximum contribution is the higher of 3,600 or 100% of earned income, subject to an annual 3
allowance of 225,000.
(2) Method of relief:
If an occupational scheme the actual payments are deducted from employment income. 1
If a personal plan the amount is paid net of tax at 22%. Higher rate relief (if applicable) is given by
extending the basic rate band by the amount paid grossed up by 100/78. 2
(3) Company contributions are exempt benefits. 1
They are, however, deductible for the purposes of corporation tax. 1
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2 (a) (i) ACC Ltd Capital allowances for the eight-month period ended 31 December 2007
FYA General Expensive Short-life CAs
pool car asset
Balances brought forward 290,000 16,000
Purchases:
Machine 31 May 2007 35,000 05
Computer 17 August 2007 6,000 05
Car 31 December 2007 11,000 1
Disposals:
Machine 12 June 2007 (12,000) 1
Car 31 December 2007 (8,000) 05
35,000 289,000 8,000 6,000
Balancing allowance (8,000) 8,000 1
WDA 25% x 8/12 (48,167) 48,167 15
FYA 50% (17,500) (3,000) 20,500 2
Transfer (17,500) 17,500
Balances carried forward nil 258,333 nil 3,000 8
Total capital allowances 76,667
(Note: The private use of the car by the director does not affect the capital allowances claim).
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Marks
(ii) ACC Ltd Adjusted trading profits for the eight-month period ended 31 December 2007
Net profit per accounts 346,300 05
Deduct:
Loan interest non trading income 20,000 05
Dividends 9,000 (29,000) 05
317,300
Add back:
Health and safety fine 10,000 05
Food hampers 11,500 05
Depreciation 32,000 05
Lease payments (working) 1,200 2
Donation to charity 2,000 56,700 05
374,000
Capital allowances (part (i)) (76,667) 05
Items unadjusted:
Overdraft interest
Wages
Cost of defending title to a fixed asset
Staff contracts legal fees
Entertainment of staff
Loan interest
Parking fines
Private car usage
Donation to Chambers of Commerce
Pension contributions 5
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Working
Car lease:
Payments 6,000
6,000 x 12,000 + 20,000 (4,800)
2 x 20,000
Add back 1,200
(b) BDD Ltd Corporation tax payments for the year ended 31 March 2008
Tax payable: 1,800,000 x 30% 540,000 1
4
Payable on:
14 October 2007 135,000 1
14 January 2008 135,000 1
14 April 2008 135,000 1
14 July 2008 135,000 1
540,000 5
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Marks
3 (a) (i) Alberto Capital gains for the tax year 200708
French musketeer
Proceeds 18,000
Expenses (1,000) 1
17,000
32,000 x
18,000
7,857
Painting
Deemed proceeds 6,000 1
Cost (9,000) 05
(3,000)
Shares
Purchase September 2002 4,000 5,600 05
Bonus issue 1 for 1 4,000 1
8,000 5,600
Disposal (6,000) (4,200) 1
2,000 1,400
Proceeds 38,000
Cost (4,200)
33,800 05
(ii) Alberto Capital gains tax for the tax year 200708
Taper: Musketeer non-business asset held for < three years 100% chargeable 05
Shares business asset held for > two years 25% chargeable 05
Capital losses should be used against the gain with the largest chargeable percentage i.e. the musketeer.
12,307
Annual exemption (9,200) 1
Tax payable:
Basic band 34,600
Used for income tax (33,900)
700 1
1,103
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Marks
(b) (i) Sandra Chargeable gain
Proceeds 220,000
Cost (140,000)
80,000 1
Proceeds not re-invested (10,000) 1
Taper relief business asset held for > two years 25% chargeable 05
Chargeable gain: 10,000 x 25% = 2,500 05
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Helena:
200607 Actual basis
1 January 2007 5 April 2007
3/12 x 5,000 1,250 1
maximum 7
(Note: Candidates are not required to give section numbers and they are shown here for completeness only).
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Marks
(c) (i) Tax point (time of supply) for VAT
The basic tax point is the date the goods are dispatched or otherwise made available to the customer. 1
However:
If the invoice is issued within 14 days after the goods have been dispatched then that date
replaces the dispatch date. 1
If an invoice is issued or payment is received before the goods are dispatched then the earliest
of these dates replaces the dispatch date. 1
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Certified Accounting Technician Examination
Advanced Level
Time allowed
Reading and planning: 15 minutes
Writing: 3 hours
ALL FOUR questions are compulsory and MUST be attempted.
Tax rates and allowances are on pages 24.
Do NOT open this paper until instructed by the supervisor.
During reading and planning time only the question paper may
be annotated. You must NOT write in your answer booklet until
instructed by the supervisor.
This question paper must not be removed from the examination hall.
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Preparing Taxation
Computations
(UK Stream)
Tuesday 9 December 2008
The Association of Chartered Certified Accountants
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SUPPLEMENTARY INSTRUCTIONS
1. Calculations and workings need only be made to the nearest .
2. All apportionments should be made to the nearest month.
3. All workings should be shown.
TAX RATES AND ALLOWANCES
The following tax rates and allowances are to be used in answering the questions
Income tax
Starting rate 12,230 10%
Basic rate 2,23134,600 22%
Higher rate 34,601 and above 40%
Note:
UK dividends will be taxed at 10% when they fall within the basic rate band and 325%
thereafter.
Personal allowance
Notes:
1. Included in the wages figure of 38,000 is an amount of 24,000 in respect of Susans drawings and
2,000 in wages for her son, Mike, who works part time in the shop. All other employees receive the same
hourly rate of pay as Susans son.
2. The electricity cost relates to the whole building. Susan lives in the flat above the shop and 40% of the
electricity relates to the shop and 60% to the flat above.
3. Susans car is used 30% for business purposes and 70% for private purposes.
4. The parking fine was issued to Susan whilst she was on a business trip.
5. The legal fees comprise:
Expenses relating to the renewal of the ten-year lease of the shop 250
Personal capital gains tax advice 50
6. Capital allowances of 800 have been claimed by Susan for the year ended 31 December 2007.
7. Susan takes stock from the shop for her own use. During the year ended 31 December 2007 the stock taken
had a cost of 800 and a normal selling price of 1,250. No adjustment for the withdrawal of this stock
has been made in the books of account.
Required:
Calculate Susans adjusted trading profit for the year ended 31 December 2007. (7 marks)
(b) Graham is also a sole trader. For his accounting year ended 31 March 2008 he made tax adjusted profits of
42,000.
Required:
Calculate the total national insurance contributions (NIC) payable by Graham for the tax year 200708 and
state by when each of the amounts calculated should be paid. (6 marks)
9 [P.T.O.
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(c) Fitz has decided to retire and travel the world. He has been in business as a sole trader for many years making
up accounts to 30 November each year. He ceased business on 31 January 2008. His tax adjusted profits have
been:
Year to 30 November 2006 18,000
Year to 30 November 2007 20,000
Period to 31 January 2008 3,000
Fitz has 1,000 unused overlap profits brought forward from the opening years of his business.
Required:
From the information given above calculate Fitzs assessable trading profits for the tax years 200607 and
200708, clearly stating, for each tax year the basis period that applies. (4 marks)
(d) Emma is also a sole trader and is registered for value added tax (VAT). In the quarter ended 31 March 2008
Emma had the following transactions:
Sales (exclusive of VAT where applicable)
Standard rated 450,000
Zero rated 20,000
Purchases of stock (all standard rated and exclusive of VAT) 180,000
Expenses (inclusive of VAT where applicable)
Wages 120,000
Electricity 40,000
Motoring expenses (all business) 15,000
A discount of 4%, on all sales is offered to customers if invoices are settled within 30 days. Only 50% of all
invoices are paid within this time.
Debts of 1,200 and 900 (exclusive of VAT), which were due on 1 May 2007 and 13 December 2007
respectively, were written off by Emma in March 2008.
Required:
Calculate the value added tax (VAT) payable or reclaimable by Emma for the quarter ended 31 March 2008.
(7 marks)
(24 marks)
End of Question Paper
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Answers
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ACCA Certified Accounting Technician Examination Paper T9 (UK) December 2008 Answers
Preparing Taxation Computations (United Kingdom) and Marking Scheme
Marks
1 (a) Peppy Benefits 200708
Car
CO
2
emissions 198
Base figure (140) 05
58
Final percentage 26
4,125
Fuel
14,400 x 26% x 9/12 2,808 15
Computer
4,000 x 20% 800 1
Business proportion 60% (480)
Benefit 320
Relocation expenses
Amount received 10,000
Tax free amount (8,000) 1
2,000
Nursery vouchers
Amount received 70 x 40 2,800
Tax free amount 55 x 40 (2,200) 1
600
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Marks
(b) Coral Income tax payable 200708
Total Non-savings Savings Dividend
income
Salary 38,000 05
Bonus 6,000 05
Benefits 2,500 05
46,500
GAYE (120) 05
Professional subscription (180) 05
39,600
Next 3,775 x 40% 1,510 05
43,375
Savings income 500 x 40% 200 05
Dividend income 1,000 x 325% 325 05
44,875
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Marks
2 (a) Taps Ltd Capital gain December 2007
214,000
Indexation allowance
192,000 x 0359 (68,928) 1
71,000 x 0262 (18,602) 1
126,470 4
(b) Taps Ltd Capital allowances for the year ended 31 March 2008
FYA General Short life Expensive Capital
pool asset car allowances
Balances brought forward 284,000 10,600
Purchases:
Plant 80,000 05
Car 30,000 05
Disposals:
Short life asset (8,000) 1
Plant (60,000) 1
80,000 224,000 2,600 30,000
Balancing allowance (2,600) 2,600 1
WDA at 25% (56,000) (3,000) 59,000 2
FYA at 50% (40,000) 40,000 1
Transfer (40,000) 40,000
Balances carried forward 208,000 nil 27,000 7
Capital allowances 101,600
(c) Taps Ltd Corporation tax for the year ended 31 March 2008
Trading profit 1,000,000
Capital allowances (part b) (101,600) 898,400 1
718,400
Non-trade interest
Receivable (20,000 + 2,000) 22,000 1
Payable (1,800 + 300) (2,100) 19,900 1
864,770
Gift aid (4,000) 05
Profits 930,770
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Marks
(d) The corporation tax is payable nine months and one day after the end of the chargeable accounting
period i.e. 1 January 2009. 1
The corporation tax return is due 12 months after the end of the chargeable accounting period i.e.
31 March 2009. 1
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3 (a) Jenny Capital gains tax for the tax year 200708
Car Exempt 1
Field
Proceeds 210,000
Indexed cost (105,000)
105,000 1
Taper relief:
9 years + 1 bonus = 10 years = 60% 1
Painting
Net proceeds 8,200
Cost (3,400)
4,800 1
Restricted to:
(Gross proceeds 6,000) x 5/3
(8,400 6,000) x 5/3 4,000 15
Taper relief:
Four years = 90% 05
Building:
Proceeds 140,000
Cost (160,000)
(20,000) 1
The loss must be used in the most beneficial manner i.e. against the gain with the highest chargeable
percentage.
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Marks
(b) Tax Advisors
Glasgow
9 December 2008
Reference: xxx
Lynette
Somewhere
England
Dear Madam
Sale of House
Thank you for your letter in which you request tax advice on the sale of your house.
Under the current rules your main residence is exempt from capital gains tax for the period you live in it as
well as for certain periods which are counted as periods of deemed occupation. Thus no tax is payable on
gains accrued during these periods. 15
The deemed occupation periods are:
periods (of any length) whilst working abroad; 1
periods, not exceeding four years in total, whilst working elsewhere in UK; and 1
periods, not exceeding three years in total, for any reason; 1
provided these periods are preceded and followed by a period of actual occupation. 05
In addition the last three years of ownership are always treated as a period of occupation. 1
It does not matter whether the house is let or empty during these deemed occupation periods. 1
Therefore, I am pleased to be able to let you know that there is no chargeable gain on the sale of your
house, as the entire 14 years during which you did not actually live in the property qualifies as a period of
deemed occupation, as follows:
Employed overseas 6 years 4 months
Employed elsewhere in the UK 4 years
Absent for any reason 1 year 3 months
Last period of ownership 2 years 5 months (a maximum of 3 years is permitted) 2
If you need any further assistance in relation to this or any other matter please do not hesitate to contact me.
Yours sincerely
A Tax advisor
Presentation 2
Maximum 10
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4 (a) Susan Adjusted trading profits for the year ended 31 December 2007
Net profit per accounts 32,600 05
Add back:
Drawings 24,000 05
Electricity 4,400 x 60% 2,640 05
Depreciation 1,000 05
Car expenses 1,800 x 70% 1,260 05
Parking fine 400 05
Legal fee re tax advice (personal) 50 05
Goods for own use (selling price) 1,250 30,600 05
63,200
Less capital allowances (800) 05
17
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Marks
Unadjusted items: Sons wages
Shop rent
Business rates
Bad debt written off
Legal fee re renewal of short lease
Trade donation
05 for each maximum of 25
(b) Graham National insurance contributions for the tax year 200708
Class 2: 220 x 52 weeks 114 1
2,441 15
Payable:
Class 2: Monthly; or quarterly (by direct billing). 1
Class 4 Payments on account based on 50% of last years contributions are due on:
31 January 2008 and 31 July 2008. 15
The balance is due on 31 January 2009. 1
23,000 2
Less unrelieved overlap profits (1,000) 22,000 1
(d) Emma Value added tax for the quarter ended 31 March 2008
Output tax:
Standard rated sales 450,000 x 96% x 175% 75,600 1
Zero rated sales 05
Input tax:
Stock 180,000 x 175% 31,500 1
Wages outside the scope of VAT 05
Electricity 40,000 x 7/47 5,957 1
Car expenses 15,000 x 7/47 2,234 1
Bad debt 1,200 x 175% 210 1
Bad debt of 900 less than six months old 05
(39,901)
24
18
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