Anda di halaman 1dari 190

CERTIFIED ACCOUNTING TECHNICIAN EXAMINATION

SAMPLE MULTIPLE CHOICE QUESTIONS JUNE 2009


Paper T9
Preparing Taxation Computations
Section A only
All questions are compulsory
Note: Section B of the actual exam paper will contain four written questions
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
2
The following questions are typical of those that will appear in Section A of the examination paper from June 2009
onwards. There will be a total of ten questions in section A.
All questions in Section A will be worth two marks each.
1 John receives a salary of 40,000 a year and has the use of a company car for private journeys. The benefit value
amounts to 4,100.
Which form does Johns employer use to report this benefit to HM Customs and Excise (HMRC) and by when must
this form reach John?
A Form P11D by 31 May
B Form P11D by 6 July
C Form P60 by 31 May
D Form P60 by 6 July
(2 marks)
2 P Ltd lets out an unused building on 1 January 2009 for a period of 21 years and for a premium of 60,000.
How much of the premium is assessed as property income in P Ltds profits chargeable to corporation tax (PCTCT)
for the year ending 31 March 2009?
A 36,000
B 60,000
C 12,000
D 24,000
(2 marks)
3 John earns 35,000 a year and was provided with a computer for both private and business use on 1 November
2008. The market value of the computer when first provided was 3,600.
What is the value of the benefit that must be shown on the benefits form completed by his employer for
200809?
A 220
B 720
C 300
D 360
(2 marks)
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
3
4 Z Ltd buys a new factory for use in its trade for 850,000. The cost comprises of:

Land 180,000
Factory 400,000
Design office 100,000
Legal fees for factory 20,000
Admin office 200,000

900,000


On what amount is industrial buildings allowance (IBA) calculated?
A 650,000
B 520,000
C 500,000
D 720,000
(2 marks)
5 X Ltd has included a deduction in its accounting profit of 3,200 in respect of the annual leasing cost for a car, which
has a recommended list price of 16,000. The car has been used for the whole of the 12-month period ended 31
March 2009.
When preparing the adjusted profit for tax purposes what adjustment must be made to the profit and loss account
in respect of the leasing cost in the year ended 31 March 2009?
A 400
B 2,800
C 1,600
D 200
(2 marks)
6 Mr Smith is a sole trader. His tax for the tax year 200809 amounts to 18,000. He did not pay any tax under
deduction at source.
On which dates were/are Mr Smiths payment on accounts due for this amount?
A 31 January 2009 and 31 July 2009
B 31 January 2010 and 31 July 2010
C 31 July 2009 and 31 January 2010
D 31 October 2009 and 31 January 2010
(2 marks)
7 Y Ltd is registered for value added tax (VAT) and uses the flat rate scheme. In his VAT quarter ended 31 March 2009
he had a tax inclusive turnover of 110,000. This comprises of standard rated sales of 80,000, zero-rated sales of
20,000 and exempt sales of 10,000. The flat rate scheme percentage for the companys trading sector is 9%.
The VAT payable by Y Ltd for the quarter ended 31 March 2009 is:
A 9,900
B 7,200
C 9,000
D 8,100
(2 marks)
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
4
8 Jim is an employee of J Ltd. Jim receives cash earnings of 27,000 and a car benefit amounting to 4,000 in the tax
year 200809. Jim is not contracted out of the state pension scheme.
How much class 1 (primary) national insurance contributions (NIC) does Jim suffer in respect of the tax year
200809?
A 2,372
B 2,812
C 2,970
D 3,410
(2 marks)
9 Richard has been a sole trader for many years making up his accounts to 31 July each year. He ceased to trade on 31
December 2008. Richards most recent adjusted profits for tax purposes have been:
Year to 31 July 2007 16,000
Year to 31 July 2008 14,000
Five months to 31 December 2008 7,000
He has unused overlap profits for earlier years amounting to 4,000.
What is Richards taxable trading profit figure for the tax year 200809?
A 17,000
B 14,000
C 21,000
D 3,000
(2 marks)
10 Peter rents out a home fully furnished. The house does not qualify as a furnished holiday letting. For the tax year
200809 his rental income and expenses are:
Rent 12,000
Expenses:
Water rates 200
Agents fee 1,200
Insurance 400
How much can Peter claim for wear and tear allowance in 200809?
A 1,200
B 1,180
C 2,400
D 2,360
(2 marks)
End of Sample Questions
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
5
Answers
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
6
Sample Multiple Choice Question Paper T9(UK) Answers
Preparing Taxation Computations
1 B
2 A

Premium 60,000
2% (211) x 60,000 (24,000)

36,000


3 C
MV x 20% x 5/12
3,600 x 20% x 5/12 = 300
4 B
Land is never an allowable cost. The admin office is only allowed if it is less than 25% of the overall cost less the land. Here it is
more than 25% and therefore does not qualify for IBA.
5 A

3,200
3,200 x 16,000 + 12,000 (2,800)

16,000 x 2 400


6 A
7 A
The flat rate perentage is applied to the full tax inclusive turnover including all standard, zero and exempt supplies.
8 A
(27,000 5,435) x 11% = 2,372


9 A
The business ceases in 200809 and therefore the basis period is the entire period covered by everything earned since the
200708 assessment of 16,000. This amount can then be reduced by the unused overlap profit.
(14,000 + 7,000) 4,000 = 17,000


10 B
Rent rates x 10%
(12,000 200) x 10% = 1,180


FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Preparing Taxation
Computations
(UK Stream)
ACCA CERTIFIED ACCOUNTING TECHNICIAN EXAMINATION
ADVANCED LEVEL
TUESDAY 15 JUNE 2004
QUESTION PAPER
Time allowed 3 hours
ALL FOUR questions are compulsory and MUST be answered
Tax rates and allowances are on pages 35
P
a
p
e
r

T
9
(
G
B
R
)
The Association of Chartered Certified Accountants
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
This page is blank.
The question paper begins on Page 3.
2
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
The following tax rates and allowances are to be used in answering the questions
Income Tax
Lower 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 allowances

Personal allowance under 65 4,615


Company car benefit
Base level for CO
2
emissions: 155 grams per kilometre
Car fuel benefit
The base figure for calculating the car fuel benefit is 14,400
Approved mileage allowances
All cars:
Up to 10,000 miles 40p
Over 10,000 miles 25p
Personal pension contribution limits
The maximum contribution that can be made without evidence of earnings is 3,600.
Age at start Maximum
of tax year percentage
Up to 35 175
3645 20
4650 25
5155 30
5660 35
61 or more 40
Subject to earnings cap of 99,000
Official Rate of Interest
5%
3 [P.T.O.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Capital allowances
%
Plant and machinery
Writing down allowance 25
First year allowance plant and machinery 40
information and communication
technology equipment 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

Registration limit 56,000


Deregistration limit 54,000
Capital gains tax: annual exemption
Individuals 7,900
4
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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
Capital gains tax: indexation factors (question 2)
August 1985December 2003: 0866
May 1993December 2003: 0263
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 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.
5 [P.T.O.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
ALL FOUR questions are compulsory and MUST be attempted
1 (a) Penny Donald is 46 and works as a sales manager for Modern Fashions plc, a large UK resident company.
Pennys salary is 46,000 per annum.
During the tax year 2003/04 Modern Fashions plc provided Penny with the following benefits:
The use of a company car. This was a petrol driven 2000 cc BMW with a CO
2
emission level of 242 gm/km
and a recommended list price of 21,000. The car was for Pennys sole use and she drove a total of 12,000
miles during 2003/04 of which 60% were on business related journeys. The company paid for all the petrol
used by Penny, however Penny contributed 40 per month towards the overall cost of this.
Workplace parking which cost the company 1,200 per year.
Private medical insurance. This cost the company 800, but would have cost Penny 960 if she had
arranged this herself.
Nursery provision for Pennys two children. This cost the company 2,500 and was used by Penny to help
pay for the fees at Pennys local nursery school.
A computer system with a recommended selling price of 4,800. This Penny used at home for both
business and private purposes. She estimates that 40% of the use was for business and 60% for personal
use. The computer was first provided in February 2003.
Penny paid 350 per month to the companys occupational pension scheme.
Penny paid tax of 9,165 under the PAYE system for the year 2003/04.
In addition to the above Penny received the following investment income for 2003/04:
Building society interest of 2,400
UK dividend income of 900
Interest of 350 from an Individual Savings Account (ISA).
The above amounts are stated as the cash amounts received.
Penny also paid a cash amount of 390 in December 2003 to the charity, Oxfam, under the gift aid scheme.
Required:
Calculate the income tax payable by Penny for the tax year 2003/04. (18 marks)
(b) Penny wishes to complete her 2003/04 tax return as soon as possible and is waiting for PAYE forms to be
provided by Modern Fashions plc.
Required:
(i) State which form gives details of Pennys pay, tax and national insurance contributions for the year and
by which date she should receive this.
(ii) State which form gives details of Pennys benefits for the year and by which date she should receive
this.
(iii) State by which date Penny should return her tax return for the year ended 5 April 2004 to the Inland
Revenue if she wishes them to calculate the income tax due. (5 marks)
(c) Pennys husband, Adrian, also works for Modern Fashions plc and received a salary of 38,000 for 2003/04.
In addition he received a car benefit calculated as 2,400 for that year. He is not a director and did not receive
any bonuses.
Required:
Calculate for both Adrian and Modern Fashions plc, the total national insurance contributions due for the tax
year 2003/04. (5 marks)
6
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
(d) Adrian owns a house, which is not his main residence and which has been let furnished to tenants for the last
four years.
The annual rent payable in advance by equal monthly instalments on the 6th of each month was 7,200 until
December 2003 but was increased to 7,800 per year with effect from 6 January 2004. All amounts were
received on time with the exception of that due for 6 March 2004, which was not received until 2 May 2004.
Expenditure relating to the property was as follows:
Council tax 960
Water rates 380
Agents fees 780
Re-decoration costs 1,250
New kitchen units 2,400
Mortgage interest 2,500
All these amounts were paid in 2003/04 by Adrian with the exception of the council tax which was the
responsibility of the tenants.
The kitchen units were purchased to replace the existing out-dated units in an attempt to modernise the property.
The mortgage interest was paid in respect of a 50,000 interest only loan at 5% per annum
Required:
Calculate the amount assessable under Schedule A for the tax year 2003/04. Assume Adrian will claim wear
and tear allowance. (You are not required to calculate the amount of tax payable). (5 marks)
(33 marks)
7 [P.T.O.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
2 (a) Baker Productions plc owns 60% of Street Industries Ltd and 40% of Holmes Ltd. All three companies are UK
resident and make up their accounts to 31 March annually.
During its accounting year ended 31 March 2004 Baker Productions plc had the following items of income and
expenditure:
Income:

Adjusted trading profit (before capital allowances) 262,400


Rent 24,000
Bank interest 8,000
Debenture interest 14,000
Dividend from Street Industries Ltd 9,000
Dividend from Holmes Ltd 5,400
Expenditure:
Gift aid donation to the charity, Oxfam 2,000
Baker Productions plc had purchased its factory premises on 1 May 1998 for 140,000 from another UK
company, which had purchased the factory new on 1 August 1995 for 100,000. Both companies have always
used the factory for qualifying industrial purposes.
Baker Productions plc had balances brought forward as at 1 April 2003 on its plant and machinery pool and a
short life asset (SLA) of 112,000 and 2,900 respectively. The only transactions affecting these amounts were
the disposal of the SLA on 2 September 2003 for 3,400 and the purchase of a second-hand machine for
20,000 on 1 December 2003. The SLA sold had originally cost 6,000 in May 2001. The company is classed
as medium sized for capital allowances purposes and always claims the maximum possible allowances.
In addition to the above Baker Productions plc sold an office complex, which had never been used in the
business, for 180,000 in December 2003. This had originally cost 60,000 in August 1985 and had been
extended at a cost of 21,000 in May 1993.
A trading loss of 9,406 and a capital loss of 10,500 were brought forward as at 1 April 2003.
Required:
(i) Calculate the total capital allowances for plant and machinery and the total industrial buildings
allowance (IBA) for Baker Productions plc in respect of the year ended 31 March 2004; (6 marks)
(ii) Calculate the corporation tax payable by Baker Productions plc for the year ended 31 March 2004.
(13 marks)
Note: The indexation factors to be used in this question are in the table of rates and allowances.
8
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
(b) City Merchandise Ltd prepares value added tax (VAT) returns on a quarterly basis. It does not operate the cash
accounting scheme. During the companys quarter ended 31 March 2004 the following transactions occurred:
Standard rated sales 110,000
Zero-rated sales 30,000
Standard rated purchases 60,000
The above three amounts are stated exclusive of VAT where applicable.
The company offers a 5% discount to customers who pay within 30 days. This discount is offered on all sales
but only 50% of customers settle within the discount period.
The company also paid the following expenses during the same VAT quarter:
Electricity 4,000
Wages 28,000
Accountancy fees 1,000
Machine repairs 2,500
The above four amounts are stated inclusive of VAT where applicable.
Required:
Calculate the VAT due for the quarter ended 31 March 2004 and state by when this amount must be paid.
(6 marks)
(25 marks)
9 [P.T.O.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
3 (a) Bobby Jenkins is 44 years old and has taxable income of 28,420 (after deduction of his personal allowance)
for the tax year 2003/04.
During the tax year 2003/04 Bobby disposed of the following assets:
18 May 2003: An antique vase was sold for 8,450 net of expenses of sale amounting to 550. The vase had
cost 3,200 in June 1999.
21 October 2003: 2000 shares in ABC Ltd were sold for 15,400. Bobby had originally purchased 2,400
shares for 8,100 in May 1998. ABC Ltd had made a 1 for 4 rights issue for 450 each in September 2000.
Bobby had purchased his full rights entitlement.
19 November 2003: A silver necklace was sold for 2,000. It had originally been purchased in January 1999
for 7,500 when it was thought to have originated from a much earlier period than it actually did.
2 March 2004: A watercolour painting was sold for 24,000. This had cost 8,000 in February 1986 and had
an indexed cost of 13,460 in April 1998.
The shares in ABC Ltd were classed as a business asset, the other three assets were all non-business assets.
Required:
Calculate the capital gains tax (CGT) payable by Bobby for the tax year 2003/04 and state when this is due
for payment. (16 marks)
(b) Louise Duncan has for several years run a very successful business as a sole trader. During the next few months
she intends to sell some of her business assets and to re-invest in other assets, some of which will have an
expected useful life of 40 years and some of 70 years.
She understands that a relief may be available which would defer any capital gains that may otherwise be
chargeable as a result of the above disposals and has asked you for advice.
Required:
Write to Louise stating the relief available, how it affects any replacement assets and outlining the conditions
which must be fulfilled for the relief to be claimed.
(Use fictitious addresses in your letter. Marks will be awarded for the style and presentation of your answer).
(12 marks)
(28 marks)
10
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
4 Amanda Cooke started in business as a self-employed clothes designer on 1 December 2000. She made up her first
set of accounts to 31 May 2001 and annually thereafter. Her first two sets of adjusted Schedule D Case I profits after
capital allowances were:
Period ended 31 May 2001 4,260
Year ended 31 May 2002 8,190
During her accounting year ended 31 May 2003 Amanda had the following results:

Turnover 18,000
Cost of goods sold (7,300)

Gross profit 10,700


Discounts received 300
Bank interest received 450

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
11
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Answers
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Employment earnings 56,888 56,888


Building society interest 2,400 x 100/80 3,000 3,000 1
Dividend 900 x 100/90 1,000 1,000 1

Statutory total income (STI) 56,888 3,000 1,000 60,888
Personal allowance 4,615 4,615 05

Taxable income 52,273 3,000 1,000 56,273


Tax payable:
1st 1,960 x 10% 196 05
Next 29,040 * x 22% 6,389 05
Next 21,273 x 40% 8,509 05

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
2
emission 242
1st 155

87 05

87/5 17 (rounded down) 05


15 + 17 = 32% 05
21,000 x 32% 6,720 1

Fuel 14,400 x 32% 4,608 1

Parking Exempt 1
Medical
insurance Cost of providing 800 1

Nursery Cost of providing 2,500 1

Computer 4,800 x 20% 960


1st 500 460 2

Total benefits 15,088


Total 18
15
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Modern Fashions plc


Class 1 1st 4,615 nil 05
Next 33,385 x 128% 4,273 1
Class 1A 2,400 x 128% 307 1

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

16
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Adjusted Schedule D Case I profit 222,406


Loss brought forward 9,406 1

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

Profit chargeable to corporation tax (PCTCT) 288,017


Franked investment income (FII) (5,400 x 100/90) 6,000 1

Profits 294,017

Dividend from Street Industries Ltd is not taken into account 1


Tax payable:
288,017 x 30% 86,405 1
(750,000 294,017) x 288,017 x 11/400 12,284 1

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

Working 2 Tax thresholds


1,500,000 = 750,000

2
300,000 = 150,000 1

Total 13
17
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Wages are outside the scope of VAT 1


Payable by: 30 April 2004 1

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

Lower gain taken 5,000 05

Taper relief: 3 years 95%


21 October 2003
Working:
Shares Cost

Purchased 2,400 8,100


Rights issue 600 2,700

3,000 10,800
Disposal 2,000 7,200 (average cost) 2

1,000 3,600


Gain:
Proceeds 15,400
Cost 7,200

8,200 1

Taper relief: 5 years 25% (business asset)


19 November 2003
Deemed proceeds 6,000
Cost 7,500

Loss 1,500 2

2 March 2004
Proceeds 24,000
Indexed cost 13,460

10,540 1

Taper relief: 5 years + 1 bonus year = 6 years 80%


18
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Marks
Summary:
The loss should be used against the gain entitled to the lowest amount of taper relief (i.e. gain 1) 1

(5,000 1,500) x 95% 3,325 1


8,200 x 25% 2,050 05
10,540 x 80% 8,432 1

13,807
Annual exemption 7,900 05

Total chargeable gains 5,907

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

Due date: 31 January 2005 1

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
19
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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


3
(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


4
(c) Amanda Cooke Opening year assessments
2000/01 Actual
1 December 20005 April 2001
4/6 x 4,260 2,840 15

2001/02 1st 12 months


1 December 200030 November 2001
4,260 + (6/12 x 8,190) 8,355 15

2002/03 c/yr basis 31 May 2002 8,190 1

2003/04 c/yr basis 31 May 2003 8,440 1


5
20
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Marks
(d) Amanda Cooke Overlap profits

Assessments 2000/01 2,840


2001/02 8,355
2002/03 8,190

19,385
Earned 4,260
8,190

6,935 2


total answer 4 14
21
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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
P
a
p
e
r

T
9
(
G
B
R
)
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
This is a blank page.
The question paper begins on page 3.
2
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Personal allowance 4,615


Company car benefit
Base level for CO
2
emissions: 155 grams per kilometre
Car fuel benefit
The base figure for calculating the car fuel benefit is 14,400
Authorised mileage allowances
All cars:
Up to 10,000 miles 40p
Over 10,000 miles 25p
Personal pension contribution limits
The maximum contribution that can be made without evidence of earnings is 3,600.
Age at start Maximum
of tax year percentage
Up to 35 175
3645 20
4650 25
5155 30
5660 35
61 or more 40
Subject to earnings cap of 99,000
Official Rate of Interest
5%
3 [P.T.O.
4
D

G
B
R
T
T
P
a
p
e
r

T
9
G
B
R
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Registration limit 56,000


Deregistration limit 54,000
Capital gains tax: annual exemption
Individuals 7,900
4
4
D

G
B
R
T
T
P
a
p
e
r

T
9
G
B
R
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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.
5 [P.T.O.
4
D

G
B
R
T
T
P
a
p
e
r

T
9
G
B
R
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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)
6
4
D

G
B
R
P
A
P
a
p
e
r

T
9
G
B
R
4
D

G
B
R
A
A
P
a
p
e
r

T
9
G
B
R
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
(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)
7 [P.T.O.
4
D

G
B
R
A
A
P
a
p
e
r

T
9
G
B
R
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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)

Gross profit 1,810,000


Profit on sale of an asset (note 1) 141,000
Rent received (note 2) 168,000
Depreciation 70,000
Wages 320,000
Power and lighting costs 48,000
Increase in general provision for bad debts 18,000
Miscellaneous expenses (note 3) 28,000 (484,000)

Net profit 1,635,000

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:

Legal fees in respect of trade debt collection 5,000


Customer entertainment 2,000
Gifts of food hampers to customers valued at 60 each 3,000
Legal fees in respect of the renewal of a 40 year lease on its factory 3,500
Office expenses (all allowable) 14,500

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)
8
4
D

G
B
R
A
B
P
a
p
e
r

T
9
G
B
R
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
(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)
9 [P.T.O.
4
D

G
B
R
A
B
P
a
p
e
r

T
9
G
B
R
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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)
10
4
D

G
B
R
A
C
P
a
p
e
r

T
9
G
B
R
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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
11
4
D

G
B
R
A
D
P
a
p
e
r

T
9
G
B
R
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Answers
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Employment income 40,750 40,750


Schedule A rent 820 820 0.5
Bank interest (280 x 100/80) 350 350 1
Building society interest (360 x 100/80) 450 450 1
Dividend (270 x 100/90) 300 300 1

Statutory total income (STI) 41,570 800 300 42,670
Personal allowance 4,615 4,615 0.5

Taxable income 36,955 800 300 38,055


Note: ISA interest is tax free 1
Tax payable:
1st 1,960 x 10% 196 0.5
Next 28,940 * x 22% 6,367 0.5
Next 6,055 x 40% 2,422 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

*Basic band extended


(30,500 1,960) + (312 x 100/78) = 28,940 1

11
(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


3
(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


3
15
4
D

G
B
R
I
X
P
a
p
e
r

T
9
G
B
R
4
D

G
B
R
A
A
P
a
p
e
r

T
9
G
B
R
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Marks
(b) Trudy Gray Benefits 200304
Van
Statutory benefit 500 1
Note: petrol is included in the van benefit 0.5
Entertainment system

Original cost 1,200


Assessments for:
200102 240
200203 240
200304 (6 months only) 120 120

600 2.5

Current market value 300 0.5

Higher of the two 600 0.5


Overseas expenses
14 a night exceeds the statutory limit of 10
therefore the full amount is taxable 1,120 1.5
Luncheon vouchers
336 (224 x 15p) 302 1
Mileage
(55p 40p) x 6,000 miles 900 1.5

Total benefits 3,542 9

(c) (i) Trudy Gray Pension contributions 200304


Take the highest NRE of the current year and previous five years = 43,000
Age at start of tax year 200304 = 41 years
Applicable percentage therefore = 20%
Maximum contribution = 43,000 x 20% 8,600 2

(ii) Payable by 31 January 2005 1


(iii) Premiums are paid to the pension provider net of tax at 22% 1
Higher rate relief is given by extending the basic rate band by the gross pension contribution 1

5
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

Total allowances 85,000

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

16
4
D

G
B
R
A
A
P
a
p
e
r

T
9
G
B
R
4
D

G
B
R
A
B
P
a
p
e
r

T
9
G
B
R
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Marks
(ii) Adjusted Schedule D Case I profits UK Fabrics Ltd

Net profit per accounts 1,635,000


Deduct:
Profit on sale of asset 141,000 0.5
Rental income 168,000 309,000 0.5

1,326,000
Add back:
Depreciation 70,000 0.5
Increase in bad debt provision 18,000 0.5
Entertainment of customers 2,000 0.5
Gifts (food hampers) 3,000 93,000 0.5

Adjusted profits 1,419,000

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


6
(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

2. Upper limits for three months ending 31 March 2004


1,500,000 x 3/12 = 375,000 1
300,000 x 3/12 = 75,000

8
17
4
D

G
B
R
A
B
P
a
p
e
r

T
9
G
B
R
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Total 27
18
4
D

G
B
R
A
b
P
a
p
e
r

T
9
G
B
R
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Taper relief 3 yrs: 95% 0.5


House
Proceeds 290,000
Indexed cost 186,000

104,000 1

Taper relief 5 yrs + 1 bonus: 80% 0.5


Shares
Matched with January 2004 (next 30 days) 0.5
Proceeds 200/2,000 x 3,500 350
Cost 300

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

Taper relief 3 years: 25% 0.5


Matched with September 1993 (FA 85 pool)
Proceeds 800/2,000 x 3,500 1,400
Indexed cost 800/1,000 x 640 512

888 1.5

Taper relief 5 years: 25% 0.5


Use of loss
Against gains with lowest taper relief
Shares (50 + 100) 150 Nil
Land 42,000 8,350 33,650 2
Summary of gains
Land 33,650 x 95% 31,967 0.5
House 104,000 x 80% 83,200 0.5
Shares 325 x 25% 81 0.5
Shares 888 x 25% 222 0.5

115,470
Annual exemption 7,900 1

Net taxable gains 107,570


16
19
4
D

G
B
R
A
C
P
a
p
e
r

T
9
G
B
R
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Marks
(b) (i) Harry Perkins Chargeable gain

Proceeds (deemed) 185,000


Cost 90,000

95,000 1
Chargeable now
(115,000 90,000) 25,000 1.5

Deferred gain gift relief 70,000 0.5

Taper relief 4 years: 25%


Chargeable gain 25,000 x 25% 6,250 1

(ii) Amanda Perkins base cost


185,000 70,000 = 115,000 1

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

Factory cost 180,000 1


Legal fees 10,000 1
Tunnelling 12,000 1

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

6
(ii) Industrial buildings allowance available
4% x 202,000 = 8,080
8,080 x 8/12 = 5,387 2


Total 18
20
4
D

G
B
R
A
C
P
a
p
e
r

T
9
G
B
R
4
D

G
B
R
A
D
P
a
p
e
r

T
9
G
B
R
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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
P
a
p
e
r

T
9
(
G
B
R
)
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
This is a blank page.
The question paper begins on page 3.
2
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Personal allowance 4,745


Company car benefit
Base level for CO
2
emissions: 145 grams per kilometre
Car fuel benefit
The base figure for calculating the car fuel benefit is 14,400
Authorised mileage allowances
All cars:
Up to 10,000 miles 40p
Over 10,000 miles 25p
Personal pension contribution limits
The maximum contribution that can be made without evidence of earnings is 3,600.
Age at start Maximum
of tax year percentage
Up to 35 175
3645 20
4650 25
5155 30
5660 35
61 or more 40
Subject to an earnings cap of 102,000
Official Rate of Interest
5%
3 [P.T.O.
4
D

G
B
R
T
T
P
a
p
e
r

T
9
G
B
R
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Registration limit 58,000


Deregistration limit 56,000
Capital gains tax: annual exemption
Individuals 8,200
4
4
D

G
B
R
T
T
P
a
p
e
r

T
9
G
B
R
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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.
4
D

G
B
R
T
T
P
a
p
e
r

T
9
G
B
R
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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)
6
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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)
8
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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
9
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Answers
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Employment income 60,940 60,940


Bank interest 300 300 1
(240 x 100/80)
Building society interest
(190 x 100/80) 237 237 1
Dividends
(280 x 100/90) 311 311 1
ISA interest tax free 05

STI 60,940 537 311 61,788
Personal allowance 4,745 4,745 05

Taxable Income 56,195 537 311 57,043


Basic rate band extension:
(31,400 2,020) + (234 x 100/78 x 12) + (2,340 x 100/78) = 35,980 2
Tax payable:
1st 2,020 x 10% 202 05
Next 35,980 x 22% 7,916 05
Next 18,195 x 40% 7,278 05

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

13
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
14
Marks

Furniture
12,000 x 20% 2,400 1

Wages and bills


1,500 + 550 2,050 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%

List price 26,500 + 800 27,300 05


Capital contribution 4,000 05

23,300

Car 23,300 x 30% 6,990 1

Fuel 14,400 x 30% 4,320 1

(no reduction for fuel contribution)


Golf fees 750 1

Travel expenses tax free 05


Total benefits 22,360

23
(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

(ii) Neha National insurance contributions


Class 2 205 x 52 107 1
Class 4 (18,720 4,745) x 8% 1,118 2

1,225 3

4
D

G
B
R
A
A
P
a
p
e
r

T
9
G
B
R
4
D

G
B
R
A
B
P
a
p
e
r

T
9
G
B
R
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

34

2 (a) (i) Thompson Brothers Ltd Capital allowances


Plant and machinery
FYA General Expensive CAs
pool car

Balance b/fwd 140,000 05
Purchases 80,000 22,000 1
Disposals 23,000 05

117,000 22,000
WDA 25% x 9/12 21,937 21,937 1
WDA 3,000 x 9/12 2,250 2,250 1

95,063 19,750
FYA 40% 32,000 32,000 1
Transfer to general pool 48,000 48,000

Balances c/fwd 143,063 19,750


Total allowances 56,187

Industrial buildings (IBA)


Cost (less land) 120,000 1
WDA 4% x 9/12 3,600 3,600 1

116,400

Total for plant and machinery and industrial buildings 59,787 7


15
4
D

G
B
R
A
B
P
a
p
e
r

T
9
G
B
R

FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com


Marks
(ii) Thompson Brothers Ltd Corporation tax payable for the
period ended 31 December 2004

Adjusted profits 256,663 05
Capital allowances 59,787 05
Adjusted Schedule D Case I 196,876
Schedule A (9/12 x 10,000) 7,500 1
Schedule D Case III:
Debenture interest (120,000 x 5% x 9/12) 4,500 1
Interest for late payment of tax 2,000 2,500 1

Capital gain (w) 24,320


loss b/fwd 4,000 20,320 1

227,196
Charge on income:
Gift aid 7,000 05

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

(b) Parker plc Corporation tax year ended 31 March 2005


(i) Tax payable: 1,600,000 x 30%: 480,000 1

(ii) Each instalment is 480,000/4: 120,000 1


Payment dates:
14 October 2004 120,000 (7th month) 1
14 January 2005 120,000 (10th month) 1
14 April 2005 120,000 (13th month) 1
14 July 2005 120,000 (16th month) 1

23

16
4
D

G
B
R
A
b
P
a
p
e
r

T
9
G
B
R
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Taper relief 25% (6 yrs) 05


Painting:
Proceeds 9,870 05
Auctioneer's fees 987 05

8,883
Cost 2,500 05

6,383

(9,870 6,000) x 5/3 6,450 1

Lower amount taken 6,383 05

Taper relief 80% (6 yrs) 05


Summary:
Factory Painting Total

Gain 54,760 6,383
Loss b/fwd 3,400 1

54,760 2,983
Taper relief (25/80%) 13,690 2,386 16,076 1
Annual exemption 8,200 05

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


10

(b) (i) Jane Bush Chargeable gain for 200405

Proceeds 29,500
Cost 18,000

11,500
Chargeable now 1,500 (not reinvested)

Deferred to replacement 10,000 2

Taper relief 85% (5 yrs) 05


Gain 1,500 x 85% 1,275 05

17
4
D

G
B
R
A
C
P
a
p
e
r

T
9
G
B
R
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
18
Marks
(ii) Base cost of replacement:

Cost 28,000
Deferred 10,000

18,000 1

(c) Peter Stone Actual and deemed periods of occupation


Period Occupation Non Reason
Occupation
months months
010784 310886 26 Lived in 1
010986 300491 56 Working abroad 1
010591 311291 8 Lived in 1
010192 311296 60 Working in UK max 4 years +
Any reason max 3 years 2
010197 280299 26 Lived in 1
010399 300604 36 28 Last 3 yrs balance for any
reason not counted as not moved
back in 2

Totals 212 28 8

22

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

10

4
D

G
B
R
A
C
P
a
p
e
r

T
9
G
B
R
4
D

G
B
R
A
D
P
a
p
e
r

T
9
G
B
R
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

(c) Bob Hawkes Tax points


The basic tax point is generally the earliest of the following dates:
The date of delivery;
The date of the invoice; or
The date of payment 3
However if the invoice is issued within 14 days of the delivery date then the invoice date will be applied. 1
Therefore the tax points are:
14 May 2004 for the deposit of 350 and
20 July 2004 for the balance 2

21

19
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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
P
a
p
e
r

T
9
(
G
B
R
)
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
This is a blank page.
The question paper begins on page 3.
2
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Personal allowance 4,745


Company car benefit
The base level of CO
2
emissions is 145 grams per kilometre
Car fuel benefit
The base figure for calculating the car fuel benefit is 14,400
Authorised mileage allowances
All cars:
Up to 10,000 miles 40p
Over 10,000 miles 25p
Personal pension contribution limits
The maximum contribution that can be made without evidence of earnings is 3,600.
Age at start Maximum
of tax year percentage
Up to 35 175
36 to 45 20
46 to 50 25
51 to 55 30
56 to 60 35
61 or more 40
Subject to an earnings cap of 102,000
Official Rate of Interest
5%
3 [P.T.O.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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 (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 2004 to 31 March 2005 (6 April 2004 to 5 April 2005
for unincorporated businesses).
Industrial buildings
Writing down allowance 4
Corporation tax
Financial year 2003 2004
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
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

Registration limit 58,000


Deregistration limit 56,000
Capital gains tax: annual exemption
Individuals 8,200
4
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
ALL FOUR questions are compulsory and MUST be attempted
1 Your name is Harry Knowles and you work as a tax technician for a small tax partnership, Pay and Payne.
Your firm has just taken on three new clients: Newco Ltd and two individuals both of whom work for Newco Ltd.
Your line manager has asked you to deal with the following queries, one from each of the new clients.
(a) Newco Ltd is a recently formed company and is due to make up its first set of accounts for the period 1 April
2004 to 31 March 2005. It is aware of the need to complete certain forms as part of the end of year pay as you
earn (PAYE) procedures in respect of its employees.
Required:
Write a letter to the Board of Directors of Newco Ltd, giving details of the year end forms required to be
completed under the PAYE procedures and stating by what date(s) these forms need to be submitted to the
Revenue.
For the purpose of this part of the question, assume that todays date is 1 March 2005.
Marks will be awarded for the style and presentation of your answer. (8 marks)
(b) Sami Jenkins, an employee of Newco Ltd, has asked for help in calculating the value of the benefits she is
receiving from Newco Ltd. She has provided the following information regarding the benefits received during the
tax year 200405:
(i) A loan to help her purchase a new home. Newco Ltd advanced 25,000 on 6 June 2004 at an interest
rate of 2% per year. Sami repaid 10,000 on 6 December 2004. The remaining 15,000 was still
outstanding on 5 April 2005.
(ii) During the year Newco Ltd paid 3,500 into Samis personal pension plan.
(iii) Assistance with relocation costs from the Newco Ltd office in Manchester to the Newco Ltd office in
Winchester (a distance of 210 miles), totalling 9,500.
(iv) Private medical insurance cover, which had an annual cost to the company of 560. If Sami had arranged
this cover herself it would have cost her 750.
(v) Workplace parking costing 400.
Sami earns a salary of 28,000 per year.
Required:
Calculate the total value of Samis benefits to be assessed to income tax for the tax year 2004-05. Clearly
identify any benefits which are exempt from tax and, where applicable, include any alternative calculations
in full as part of your workings. (9 marks)
(c) Jenny Smith, another employee of Newco Ltd, who returned to the UK at the end of April 2004, having spent
the previous six months on holiday overseas, has asked you to calculate her income tax payable for the tax year
200405. She has provided the following information:
(i) She started work with Newco Ltd on 1 May 2004 with an annual salary of 32,700. She received a salary
increase of 4% from 1 January 2005.
(ii) A Christmas bonus of 2,000 was received in December 2004 and an end of year bonus of 1,500 in
respect of the companys year 1 April 2004 to 31 March 2005 was received in May 2005.
(iii) A taxable benefit of 2,400 has been calculated for the private use of a car provided to her by the company
(iv) UK dividends of 1,800 (cash amount) were received in January 2005.
(v) Net bank interest of 480 was received in December 2004.
(vi) Premium bond prizes of 250 and 50 were received in May 2004 and November 2004 respectively.
6
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
(vii) An amount of 234 was paid to a registered UK charity under the gift aid scheme in November 2004
(viii) Newco Ltd deducted income tax under PAYE totalling 5,820 from Jennys earnings.
(ix) A UK property was rented out fully furnished at a monthly rent of 400 from 1 July 2004. The full amount
of rent due has been received during 2004-05. Expenses consisted of:
Water rates (for the period 1 April 2004 to 31 March 2005) 240
Repairs to property in January 2005 640
Insurance (for the period 1 April 2004 to 31 March 2005) 360
Agents fees 510
Cost of new kitchen units 1,800
The property was not available for letting prior to 1 July 2004.
Jenny intends to claim any allowances available.
Required:
Calculate the income tax payable by Jenny for the tax year 200405. (18 marks)
(35 marks)
7 [P.T.O.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
2 (a) Red Ltd is a UK resident company with no associates. Red Ltd has always made up accounts to 31 October.
During the year to 31 October 2004 the company had the following transactions in capital items:
Purchases:
4 November 2003 Plant costing 8,000
2 May 2004 Plant costing 18,000
8 June 2004 Car (A) costing 20,000
12 July 2004 Car (B) in part exchange (see details below)
Disposals:
3 March 2004 Plant for 8,000 (original cost 7,000)
12 July 2004 Car (C) in part exchange (see details below)
14 August 2004 Car (D) for 3,000 (original cost 14,000)
Car (A) purchased in June 2004 will be used 40% for business use and 60% for private use by the Finance
Director of the company.
Car (C), which had cost 9,000 in September 2002, was traded in against the purchase of car (B). The trade
in value was 4,000 and the new car (B) was worth 11,000. The company paid the additional amount in
cash. Car (B) is used 100% for business purposes.
None of the cars are low emission vehicles.
The tax written down value of the general pool of plant and machinery for capital allowance purposes as at
1 November 2003 was 46,000 and the tax written down value of car (D), an expensive car, at the same date
was 8,000.
The company is classed as small for capital allowance purposes.
Required:
Calculate the maximum capital allowances that Red Ltd can claim for the year ended 31 October 2004.
(10 marks)
(b) Blue Ltd is a UK resident company with no associates. The company has recently changed its accounting
year-end to September. The company has had the following results for the four accounting periods ending
30 September 2004:
Year to 9 months to Year to Year to
31 December 2001 30 September 2002 30 September 2003 30 September 2004

Schedule D Case I profit 70,000 80,000 40,000
Schedule D Case I loss (180,000)
Schedule A 12,000 9,000 112,000 12,000
Chargeable gain 10,000
Gift aid payment (2,000) (2,000) (2,000) (2,000)
Required:
(i) Calculate the profit chargeable to corporation tax (PCTCT) for each of the above periods on the
assumption that Blue Ltd claims relief for the trading loss at the earliest opportunity. (8 marks)
(ii) State the amounts of any unrelieved losses and/or charges carried forward as at 30 September 2004.
(2 marks)
8
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
(c) Green Ltd is a UK resident company with one 100% owned associate. The company had the following results
for the year ended 31 March 2005:
Income:

Adjusted Schedule D Case I profit 980,000


Debenture interest received (note 1) 7,500
Chargeable gain 85,000
UK dividends received (not from the associate) 27,000
Expenditure:
Bank interest paid (note 2) 3,000
Gift aid payment 4,000
Notes:
1. The debenture interest received was in respect of 100,000 debentures purchased on 16 May 2002 at an
interest rate of 10%. The amount of the debenture interest outstanding at 31 March 2005 will be received
in April 2005.
2. The bank interest paid is the full amount due on a loan used to purchase investments.
Required:
Calculate the corporation tax payable by Green Ltd for the year ended 31 March 2005. (6 marks)
(26 marks)
9 [P.T.O.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
3 (a) Nigel Hawksworth made the following disposals of capital items in the tax year 200405:
14 May 2004: An antique vase was sold for 5,400. The vase had originally cost 3,600 in September 2002.
16 October 2004: A house, which had never been used as Nigels main residence, was sold for 240,000. The
house had originally been purchased in July 1990 for 110,000. The indexed cost of the house on 6 April 1998
was 140,000.
9 January 2005: 3,500 shares in ABC plc were sold for 9,800. Nigel had purchased ABC plc shares at the
following times:
May 2002 1,000 shares costing 1,600
August 2003 2,000 shares costing 3,600
May 2004 1 for 2 rights issue taken up, costing 220 per share
None of the above assets were classed as business assets.
Required:
Calculate Nigels total chargeable gains (before the annual exemption) for the tax year 200405.
(10 marks)
(b) Nigels brother John also made chargeable gains in the tax year 200405. His gains (before taper relief) were:
12,000 in respect of a non-business asset owned for five complete years
14,000 in respect of a business asset owned for three complete years
3,000 in respect of a non-business asset owned for four complete years
John also made an allowable capital loss of 5,000 on the sale of a fourth asset in the tax year 200405.
Johns taxable income (after his personal allowance) for income tax purposes was 28,500 for the tax year
200405.
Required:
Calculate the capital gains tax payable by John for the tax year 200405. (7 marks)
(c) Nigels sister, Pamela, has her own pottery business. On 1 September 2004 she sold a shop for 80,000, which
had cost her 42,000 on 1 May 1999.
In June 2004 she had purchased a new shop for 72,000.
Both shops were used 100% for business purposes.
Required:
On the assumption that Pamela always claims any reliefs available:
(i) calculate her chargeable gain (before the annual exemption) on the disposal of the old shop; and
(4 marks)
(ii) state the base cost of the replacement shop for capital gains tax purposes. (1 mark)
(22 marks)
10
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
This is a blank page.
Question 4 begins on page 12.
11 [P.T.O.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
4 (a) Imogen Tombay runs a small sole trader business and is registered for VAT. During the three month period ended
31 October 2004 Imogen carried out the following transactions:
Purchases:

Stock (exclusive of VAT) 42,000


Sales (exclusive of VAT where applicable):
Standard rated 98,000
Zero-rated 24,000
Expenses (inclusive of VAT where applicable):
Wages 18,000
Electricity 11,100
Accounting fees 1,1500
Computer expenses 1,1140
All sales are made with an offer of a 5% discount if settled within 21 days. Only 80% of sales are actually settled
within this period.
Imogen wrote off two trade bad debts during the period. One for 300 was due to be paid on 2 January 2004
and the other for 400 was due to be paid on 18 July 2004. Both figures are stated exclusive of VAT.
Imogen does not use either the flat rate scheme or the cash accounting scheme.
Required:
Calculate the VAT payable or reclaimable by Imogen for the three-month period ended 31 October 2004,
stating by when the VAT return must be submitted. (8 marks)
(b) Imogens sister Freda is also a sole trader and makes her accounts up to 31 March annually. Her profit and loss
account for the year ended 31 March 2005 was as follows:

Gross profit 260,000
Bank interest received 117,500
Expenses:
Wages (Note 1) 32,000
Electricity (Note 2) 12,400
Rent 11,600
Computer expenses (Note 3) 11,860
Insurance (Note 2) 11,540
Drawings by Freda 34,500
Accounting fees 11,500 1(72,400)

Net profit 195,100

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)
12
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
(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
13
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Answers
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com


18
Marks
(b) Sami Jenkins Benefits 200405
Loan
Average method:
25,000 + 15,000
= 20,000
2
20,000 x (5% 2%) x 10/12 = 500 15

Strict statutory method


25,000 x (5% 2%) x 6/12 = 375
15,000 x (5% 2%) x 4/12 = 150 525 2

The Revenue will take the higher strict method 525 05
Pension contributions
Exempt tax free benefit 1
Relocation costs

Amount received 9,500 05


Exempt limit (8,000) 1,500 1

Medical insurance
Cost to the employer 560 1
Workplace parking
Exempt tax free benefit 1

Total benefits 2,585 05



9

(c) Jenny Smith Income tax payable 200405


Non-savings Savings
Total income income Dividend

Salary
32,700 x 8/12 21,800
32,700 x 104 x 3/12 18,502 30,302 2

Bonus 12,000 1
Benefits 12,400 05

Employment income 34,702 34,702


Dividend
1,800 x 100/90 12,000 2,000 1
Bank interest
480 x 100/80 11,600 600 1
Premium bond prizes
(exempt tax free) 1
Schedule A rent
(see working) 11,658 11,658 6

Statutory total income 38,960 36,360 600 2,000
Personal allowance 1(4,745) 1(4,745) 05

Taxable income 34,215 31,615 600 2,000

FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
19
Marks
Extension of basic rate band: 31,400 + (234 x 100/78) = 31,700 1
Tax payable
1st 2,020 x 10% 202 05
Next 29,595 x 22% 6,511 05
x 10%
31,615 x 10%
x 10%
Savings
85 x 20% 17 05
Savings 515 x 40% 206 05
Dividend 2,000 x 325% 650 05

Tax liability 7,586


Tax paid at source
Dividend credit 10% (200) 05
Interest credit 20% (120) 05
PAYE (5,820) 05

Tax payable 1,446



18

Working Schedule A rent


Rent received 400 x 9 3,600 1
Water rates 240 x 9/12 (180) 1
Repairs (640) 05
Insurance 360 x 9/12 (270) 1
Agents fees (510) 05
New units (capital) 05
Wear and tear allowance
(3,600 180) x 10% (342) 15

1,658 6

Total 35

FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com


20
Marks
2 (a) Red Ltd Capital allowances for the year ended 31 March 2005
FYA General Expensive Expensive Capital
pool car (1) car (2) allowances

Balances brought forward 46,000 8,000
Purchases
Plant November 2003 8,000 05
Plant May 2004 18,000 05
Car June 2004 20,000 05
Car July 2004 11,000 1
Disposals
Plant March 2004 (7,000) 1
Car July 2004 (4,000) 1
Car August 2004 (3,000) 05

46,000 5,000 20,000
Balancing allowance (5,000) 5,000 1
WDA 25% (11,500) 11,500 1
WDA restricted (3,000) 3,000 1
FYA
8,000 x 40% (3,200) 3,200 1
18,000 x 50% (9,000) 9,000 1
Transfer to pool (13,800) 13,800
-
Balances carried forward 48,300 Nil 17,000 10

Total allowances 31,700

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)

Carried forward 8,500 1



2
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
21
Marks
(c) Green Ltd Corporation tax year ended 31 March 2005

Schedule D Case I 980,000 05
Schedule D Case III
Schedule D Debenture interest 10,000 1
Schedule D Bank interest (3,000) 7,000 05

Chargeable gain 85,000 05

1,072,000
Charge on income
Gift aid payment (4,000) 05

Profits chargeable to corporation tax 1,068,000


Franked investment income (FII)
27,000 x 100/90 30,000 1

Profits 1,098,000

Upper limit: 1,500,000/2 (associated companies) = 750,000 1


Tax payable:
Schedule D 1,068,000 x 30% 320,400 1

6

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

Taper relief 6 years + 1 bonus = 75%


100,000 x 75% = 75,000 1

Shares
Disposals are deemed to occur on a LIFO basis, thus:
Shares Cost

August 2003 2,000 3,600


1 for 2 rights issue 1,000 2,200 1

3,000 5,800
Disposal (3,000) (5,800) 1

nil nil

May 2002 1,000 1,600
1 for 2 rights issue 500 1,100 1

1,500 2,700
Disposal (500) (900) 1

1,000 1,800

FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
22
Marks
Gains

Proceeds (3,000/3,500 x 9,800) 8,400


Cost (5,800)

2,600 1

Proceeds (500/3,500 x 9,800) 1,400


Cost (900)

500 1

No taper relief for either disposal 05


Total gains 78,100 05

10
(b) John Hawksworth Capital gains tax for 200405
Gain 1 Gain 2 Gain 3 Total
Taper % 85% 25% 90%

Gain 12,000 14,000 3,000
Loss* (2,000) (3,000) 2

10,000 14,000 Nil

Tapered gain 8,500 3,500 12,000 2
Annual exemption (8,200) 1

Chargeable gains 3,800

*Use against gains with the least taper relief first


Tax payable:

(31,400 28,500) = 2,900 x 20% 580 1


(31,400 1,28,500) = 900 x 40% 360 1

940 7

(c) Pamela Hawksworth Chargeable gain for 200405

(i) Proceeds 80,000


Cost (42,000)

38,000 1
Chargeable now
(amount not reinvested) (8,000) 1

Rolled over 30,000 1

Taper relief 5 years = 25%


8,000 x 25% = 2,000 1

(ii) Cost of new factory 72,000


Rolled over (30,000)

Base cost 42,000 1



5

Total 22
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Due date of return: 30 November 2004 1

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

200405 Balance to date


200405 (8,000 + 3,000) 11,000 1
Overlap profits (6,000) 5,000 1

Total 17
23
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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
P
a
p
e
r

T
9
(
G
B
R
)
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
This is a blank page.
The question paper begins on page 3.
2
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Personal allowance 4,895


Company car benefit
The base level of CO
2
emissions is 140 grams per kilometre
Car fuel benefit
The base figure for calculating the car fuel benefit is 14,400
Authorised mileage allowances
All cars:
Up to 10,000 miles 40p
Over 10,000 miles 25p
Personal pension contribution limits
The maximum contribution that can be made without evidence of earnings is 3,600.
Age at start Maximum
of tax year percentage
Up to 35 175
36 to 45 20
46 to 50 25
51 to 55 30
56 to 60 35
61 or more 40
Subject to an earnings cap of 105,600
Official Rate of Interest
5%
3 [P.T.O.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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 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

Registration limit 60,000


Deregistration limit 58,000
Capital gains tax: annual exemption
Individuals 8,500
4
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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.
5 [P.T.O.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
ALL FOUR questions are compulsory and MUST be attempted
1 (a) Fred was self employed until 31 August 2005 when he ceased to trade. On 1 September 2005 he commenced
employment as a business manager with Hi-Low Ltd, a large UK company.
Freds tax adjusted profits, after capital allowances, for his final two accounting periods were as follows:
Year ended 31 May 2005: 25,000
3 months to 31 August 2005: 4,000
Unused overlap profits from his opening years of business were 2,000.
From 1 September 2005 Fred received an annual salary of 36,000 gross from Hi-Low Ltd and during the tax
year 200506 also received the following benefits:
Private medical insurance, starting from 6 September 2005. The annual premium cost Hi-Low Ltd 720,
but the same insurance cover would have cost Fred 900 if he had arranged it privately.
Luncheon vouchers at 155 per working day. Fred worked 150 days during the period 1 September 2005
to 5 April 2006.
The use of computer equipment at home for both business and private use. The equipment had a market
value of 4,800 when it was first provided on 1 September 2005.
In addition to the above benefits Fred uses his own car for all business journeys and claims a mileage allowance
from Hi-Low Ltd. During the period 1 September 2005 to 5 April 2006 Fred drove 2,400 business miles and
received 45p per mile from Hi-Low Ltd.
During the tax year 200506 Hi-Low Ltd deducted income tax amounting to 3,300 from Freds salary.
Starting on 10 November 2005 and on the 10th of each month thereafter Fred paid 30 to a UK registered
charity via Hi-Low Ltds company arranged payroll deduction scheme. He also paid his annual subscription of
150 to the Institute of Managers, an HMRC approved professional body, in January 2006.
On 14 February 2006 Fred sent a cheque for 1,872 to his pension advisor. This sum was invested into his
private pension plan by his advisor on 22 February 2006.
Freds only other income for the tax year 200506 was:
Bank deposit account interest 600
Building society savings account interest 320
Building society Individual Savings
Account (ISA) interest 400
Debenture interest from UK companies 320
Dividends from UK companies 270
All the amounts shown are the actual cash amounts received or the actual amounts credited to the accounts.
Required:
Calculate the income tax payable by Fred for the tax year 200506. (22 marks)
(b) Peter works for Sports (UK) Ltd. During the tax year 200506 he was paid a salary of 2,210 per month. In
addition he received non-cash benefits of 8,000 for the tax year 200506 and was paid a cash bonus of
7,500 in February 2006.
Required:
Calculate the amount of class 1 and class 1A national insurance contributions (NIC) payable by Peter and
Sports (UK) Ltd for the tax year 200506. (8 marks)
(c) Susan also worked for Sports (UK) Ltd but has recently been made redundant and is about to start employment
with another company, Fitness (UK) Ltd.
Sports (UK) Ltd is about to issue Susan with her form P45 but is not sure about its distribution.
Required:
State how many parts of the form P45 are required and how all parts will be distributed and to whom.
(5 marks)
(35 marks)
6
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
2 (a) Yellow Ltd is a UK registered company, which satisfies the conditions for small company status for capital
allowance purposes.
On 1 May 2005, Yellow Ltds tax written down values brought forward were as follows:
The general pool of plant and machinery: 86,000
An expensive car (purchased in November 2000) 4,500
A short life asset (SLA) (purchased in August 2004 for 8,000) 4,000
During its eight month accounting period ended 31 December 2005 Yellow Ltd had the following capital
transactions:
Purchases
2 May 2005 Machine A, which is to be treated as a short life asset (SLA), for 18,000
14 June 2005 A car for 26,000
1 September 2005 Machine B for 20,000
Disposals:
19 June 2005 Machine C sold for 3,000 (its original cost was 6,000)
16 July 2005 The short life asset (SLA) purchased in August 2004, sold for 2,400
1 December 2005 The expensive car purchased in November 2000 sold for 6,000
Neither of the cars was a low CO
2
emission vehicle
Required:
Calculate the maximum capital allowances claimable by Yellow Ltd for its eight month accounting period
ended 31 December 2005. (10 marks)
(b) Scarlet Ltd is a large UK resident company with one associated company. The company has always made up its
accounts to 31 December each year and has always paid tax at the full rate. Due to a change in accounting
procedures the company decided to change its accounting date to 31 March.
The following are Scarlet Ltds results for the fifteen month accounting period ended 31 March 2006:
Adjusted trading profit (before capital allowances) 1,400,500
Property business profit 105,000
Capital gains
14 August 2005 disposal 28,000
2 January 2006 disposal 4,000
capital loss 12 February 2006 disposal (5,000)
Gift aid payment to a UK registered charity paid on 31 March 2006 (8,000)
The property business profit was earned evenly over the entire period and is based on the actual amount of rents
due.
The tax written down value of the companys pool of general plant and machinery brought forward on 1 January
2005 was 720,000. There were no capital transactions affecting the capital allowances pool during the fifteen
month period ended 31 March 2006.
Required:
Calculate the corporation tax payable by Scarlet Ltd for each of its two chargeable accounting periods ended
31 March 2006. (10 marks)
(c) Purple Ltd is a UK company. 80% of its issued share capital is owned by John Tracey and the other 20% is
owned by Blue Ltd. Neither John nor Purple Ltd own shares in any other company.
Purple Ltd had profits chargeable to corporation tax (PCTCT) of 40,000 for its year ended 31 March 2006 and
paid a dividend of 24,000 to John and 6,000 to Blue Ltd on 31 March 2006.
Required:
Calculate the corporation tax payable by Purple Ltd for its year ended 31 March 2006. (5 marks)
(25 marks)
7 [P.T.O.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
3 (a) Paul is a UK resident. During the tax year 200506 he made the following capital disposals:
12 May 2005 10 acres of farmland, sold for 90,000. Selling expenses amounted to 1,000. The farmland
was part of a 25-acre field that Paul had purchased in November 1999 for 54,000. The market value of the
remaining 15 acres on 12 May 2005 was 180,000. The field had never been used as a business asset.
15 October 2005 A building used in his business, sold for 140,000. The building had been purchased in
September 1996 for 60,000 and had an indexed cost of 63,420 on 6 April 1998.
14 November 2005 A vintage car, sold for 36,000. The car had been purchased in October 2001 for
21,000 and had never been used as a business asset.
2 February 2006 A painting, sold for 5,000. The painting had been purchased in May 2004 for 8,200
and had never been used as a business asset.
Pauls taxable income (after deduction of his personal allowance) for income tax purposes for the tax year
200506 was 30,800.
Required:
(i) Calculate the capital gains tax payable by Paul for the tax year 200506. (13 marks)
(ii) State the due date of payment of the tax calculated in (i). (1 mark)
(b) Pauls wife, Petra recently decided to retire after running a successful business for fifteen years. She sold a
business asset to their son Peter in February 2006 for an agreed price of 120,000. The asset is actually worth
245,000.
Petra had purchased the asset for 80,000 in 1990 and it had an indexed cost of 100,640 on 6 April 1998.
Petra and Peter have made a joint election for gift relief.
Required:
(i) Calculate Petras chargeable gain (after taper relief) on the disposal of the asset. (5 marks)
(ii) State Peters base cost of the asset for future capital gains tax purposes. (1 mark)
(20 marks)
8
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
4 (a) Carol, Wendy and Bob have been in partnership for several years. Carol receives an annual salary of 10,000
and each partner receives 4% interest on the capital they have contributed. The balance of profits is shared in
the ratio of 3:1:1 to Carol, Wendy and Bob respectively.
The capital amounts contributed are:
Carol 40,000
Wendy 20,000
Bob 10,000
For the accounting year ended 31 January 2006 the partnership tax adjusted trading profit was 80,000.
Required:
Calculate each partners taxable income from the partnership for the accounting year ended 31 January
2006. (4 marks)
(b) Morgan commenced in business as a sole trader on 1 February 2004. His first set of accounts were made up to
30 June 2004 and annually thereafter on 30 June.
Morgans tax adjusted profits, after capital allowances, for his first three accounting periods were:
5 months to 30 June 2004 8,000
Year to 30 June 2005 18,000
Year to 30 June 2006 20,000
Required:
(i) Calculate the trading income assessments for each of the first four tax years applicable to the business.
(6 marks)
(ii) State the amount of overlap profits arising. (2 marks)
(c) Charles has recently registered for VAT. A friend has told him that he may benefit from using the annual
accounting scheme. He has written to you and asked for advice on this point.
Required:
Prepare draft notes, for a meeting with Charles, outlining both the rules and potential benefits of using the
annual accounting scheme. (8 marks)
(20 marks)
End of Question Paper
9
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Answers
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
ACCA Certified Accounting Technician Examination Paper T9(GBR) June 2006 Answers
Preparing Taxation Computations (UK Stream) and Marking Scheme
Marks
1 (a)
Fred Income tax for the tax year 200506
Non
Savings Savings Dividend Total

Salary 7/12 x 36,000 21,000 1
Benefits (w1) 690
Use of own car
2,400 x (45p 40p) 120 1

21,810
Payroll giving scheme
(30 x 5) (150) 1
Professional fee (150) 1

Employment income 21,510 21,510


Trading profit (w2) 27,000 27,000
Bank interest
(600 x 100/80) 750 750 1
Building society interest
(320 x 100/80) 400 400 1
Debenture interest
(320 x 100/80) 400 400 1
ISA interest (exempt) 1
Dividend
(270 x 100/90) 300 300 1

Statutory total income (STI) 48,510 1,550 300 50,360
Personal allowance (4,895) (4,895) 05

Taxable income 43,615 1,550 300 45,465

Extension of basic rate band:
(32,400 + 1,872 x 100/78) = 34,800 1
Tax payable
1st 2,090 x 10% 209 05
Next 32,710 x 22% 7,196 05

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

13
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

(b) Peter National insurance contributions tax year 200506


Calculations must be based on Peters earning period i.e. monthly.
Monthly limits: 4,895/12 = 408
32,760/12 = 2,730
Peter received 2,210 for 11 months and 9,710 per one month
Class 1 primary (Peter)

(2,210 408) x 11% x 11 months 2,180 15


(2,730 408) x 11% x 1 month 255 15
(9,710 2,730) x 1% x 1 month 70 15

2,505

Class 1 secondary (Sports (UK) Ltd)


(2,210 408) x 128% x 11 months 2,537 1
(9,710 408) x 128 x 1 month 1,191 1

3,728

Class 1A (Sports (UK) Ltd)


8,000 x 128% 1,024 15

8

(c) Susan Form P45 distribution


Four copies required 1
Part 1 is sent to HMRC by the company (Sports (UK) Ltd) 1
Three parts are given to the employee (Susan) 1
One part is retained by Susan and two parts are given to her new employer (Fitness (UK) Ltd) 1
The new employer retains one part for their records and sends the other part to HMRC 1

35

14
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Transfer to pool (12,000) 12,000 05



Balances c/forward 81,167 nil 24,000 nil 10,800

Total allowances:
WDA 13,833
WDA restricted 2,000
Balancing allowance 1,600
FYA 15,200
Balancing charge (1,500) 05

31,133 10

(b) Scarlet Ltd Corporation tax computation for the periods ended 31 Mach 2006
12 months to 3 months to
31 December 31 March
2005 2006 1

Trading profit
1,400,500 x 12/15 1,120,400 05
1,400,500 x 3/15 280,100 05
Capital allowances (w1) (180,000) (33,750)

Adjusted trading profit 940,400 246,350
Property business profit
(12:3) 84,000 21,000 1
Capital gain 28,000 4,000 1
Capital loss (5,000) 05

Carried forward (1,000) 05



1,052,400 267,350
Gift aid (8,000) 05

Profits chargeable to corporation
tax (PCTCT) 1,052,400 259,350

Tax rate thresholds:
1,500,000/2 (x 3/12) 750,000 187,500
300,000/2 (x 3/12) 150,000 37,500 2
Tax at 30% 315,720 77,805 1

15
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Marks
w1
Capital allowances
General
pool
12 months to 31 December 2005
Balance b/forward 720,000
WDA 25% (180,000) 05

540,000
3 months to 31 March 2006
WDA 25% x 3/12 (33,750) 1

506,250

10

(c) Purple Ltd Corporation tax computation for the year ended 31 March 2006
Small company with non-corporate dividends
Underlying rate of tax:

40,000 x 19% 7,600


Marginal relief:
(50,000 40,000) x 19/400 (475)

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

5

25

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

Taper relief 5 years 85% 05


Building:
Proceeds 140,000 05
Indexed cost at 6 April 1998 (63,420) 1

76,580

Taper relief 7 years (business asset) 25% 05


Car:
Exempt 1
Painting:
Deemed proceeds 6,000 1
Cost (8,200) 05

Loss 2,200

16
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Basic band unused: 32,400 30,800 = 1,600 1


Capital gains tax payable:

11,600 x 20% 320 05


67,525 x 40% 27,010 05

27,330 13

(ii) Payable 31 January 2007 1
(b) (i) Petra Capital gains tax for the tax year 200506

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

Taper relief 7 years (business asset): 25%


40,000 x 25 10,000 1

5

(ii) Base cost for Peter


Market value 245,000
Gift relief (104,360)

140,640 1

20

17
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

4

(b) (i) Morgan Opening year assessments

200304 Actual basis 05


1 February 2004 5 April 2004 05
2/5 x 8,000 13,200 05
200405 1st 12 months of trading 05
1 February 2004 31 January 2005 05
8,000+ 7/12 x 18,000 18,500 15
200506 Current year basis 30 June 2005 18,000 1
200607 Current year basis 30 June 2006 20,000 1

(ii) Overlap profit

1 February 2004 5 April 2004


2/5 x 8,000 13,200 1
1 July 2004 31 January 2005
7/12 x 18,000 10,500 1

3,700 2

( c) Meeting notes VAT annual accounting scheme
Tax exclusive turnover must not have exceeded 660,000 in the 12 months up to the date of application
Must have been registered for at least 12 months
The 12 month registration period does not apply if turnover is 150,000 or less and can join the
scheme as soon as registered
All previous returns must be up to date
Can not join the scheme if input tax exceeded output tax in the previous year
One return is required two months after the year end
Nine monthly payments are required, each equal to 10% of last years total VAT starting at the end of
the fourth month
Quarterly payments of 25% of the agreed provisional liability can be made if taxable turnover is
150,000 or less
A balancing payment is due with the return
Must leave the scheme when taxable turnover exceeds 825,000
Only one VAT return per year so fewer chances to trigger a default surcharge
Cash flow can be managed better
One mark for each valid point maximum of 8

20

18
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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
hall
The Association of Chartered Certified Accountants
P
a
p
e
r

T
9
(
G
B
R
)
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
This is a blank page.
The question paper begins on page 3.
2
6
D

E
N
G
T
T
P
a
p
e
r

T
9
E
N
G
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Personal allowance 4,895


Company car benefit
The base level of CO
2
emissions is 140 grams per kilometre
Car fuel benefit
The base figure for calculating the car fuel benefit is 14,400
Authorised mileage allowances
All cars:
Up to 10,000 miles 40p
Over 10,000 miles 25p
Personal pension contribution limits
The maximum contribution that can be made without evidence of earnings is 3,600.
Age at start Maximum
of tax year percentage
Up to 35 175
36 to 45 20
46 to 50 25
51 to 55 30
56 to 60 35
61 or more 40
Subject to an earnings cap of 105,600
Official Rate of Interest
5%
3 [P.T.O.
6
D

E
N
G
T
T
P
a
p
e
r

T
9
E
N
G
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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 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

Registration limit 60,000


Deregistration limit 58,000
Capital gains tax: annual exemption
Individuals 8,500
4
6
D

E
N
G
T
T
P
a
p
e
r

T
9
E
N
G
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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.
5 [P.T.O.
6
D

E
N
G
T
T
P
a
p
e
r

T
9
E
N
G
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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
2
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.
6
6
D

E
N
G
P
A
P
a
p
e
r

T
9
E
N
G
6
D

E
N
G
A
A
P
a
p
e
r

T
9
E
N
G
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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)
7 [P.T.O.
6
D

E
N
G
A
A
P
a
p
e
r

T
9
E
N
G
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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)
8
6
D

E
N
G
A
B
P
a
p
e
r

T
9
E
N
G
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
(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)
9 [P.T.O.
6
D

E
N
G
A
B
P
a
p
e
r

T
9
E
N
G
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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)
10
6
D

E
N
G
A
C
P
a
p
e
r

T
9
E
N
G
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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
11
6
D

E
N
G
A
D
P
a
p
e
r

T
9
E
N
G
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Answers
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Employment income 93,483 93,483


Bank interest (3,600 x 100/80) 4,500 4,500 1
Dividends (900 x 100/90) 1,000 1,000 1
ISA dividend exempt 05

Statutory total income 98,983 93,483 4,500 1,000
Personal allowance (4,895) (4,895) 05

94,088 88,588 4,500 1,000


Extension of basic rate band: 32,400 + (312 x 100/78) = 32,800 1
Tax payable:

1st 2,090 x 10% 209 05
Next 30,710 x 22% 6,756 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

Divided by 5 and rounded down 11 1


Starting percentage 15 05

Final percentage 26

List price (28,000 + 6,000) 34,000 1

Benefit 34,000 x 26% x 9/12 6,630 6,630 1

Fuel 14,400 x 26% x 9/12 2,808 2,808 1

15
6
D

E
N
G
I
X
P
a
p
e
r

T
9
E
N
G
6
D

E
N
G
A
A
P
a
p
e
r

T
9
E
N
G
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
16
6
D

E
N
G
A
A
P
a
p
e
r

T
9
E
N
GMarks
House The house is more than six years old when Simon first occupied it, therefore
the market value at occupation is used.

Rateable value 8,000 05


Additional:
(250,000 75,000) x 5% 8,750 1.5

16,750

6 months only - 6/12 x 16,750 8,375 05


Less contribution (3,600) 05

4,775 4,775

Furniture 10,000 x 20% x 6/12 1,000 1,000 1

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

Overseas trips exempt level is 10 per night.


Therefore the full amount is exempt. 1

Total benefits 15,693


sub total to page fifteen 125

(b) Tax Advisors


London
12 December 2006
Reference: XXX
Simon
12 Street
London
Dear Sir
Furnished Holiday Letting
Thank you for your recent letter asking for information on the tax position regarding furnished holiday lettings.
To qualify as a furnished holiday letting (FHL) a property must fulfil the following conditions:
The property must be let furnished on a commercial basis with a view to the realisation of profit 1
During the relevant period the property must be available for letting for at least 140 days 1
During the relevant period the property must actually be let for at least 70 days 1
During the relevant period, the same tenant may not occupy the property for more than 31 days for a total period
comprising of no more than 155 days 1
The relevant period is normally the tax year but if the period of letting starts or ceases in a tax year the relevant
period is the twelve months beginning or ceasing with the first or last days of the letting period. 1
The tax advantages of a property being treated as a FHL are:
Relief is given for losses as if they were trading losses, thereby allowing relief against other income 1
Capital allowances on furniture will be available instead of the 10% wear and tear allowance 1
The income qualifies as net relevant earnings for personal pension contributions 1
The property is a business asset and therefore capital gains tax reliefs are available on disposal 1
If I can be of further assistance please do not hesitate to contact me on the above number.
Yours faithfully
A Technician
Presentation 2

11

Total 34

FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com


17
6
D

E
N
G
A
B
P
a
p
e
r

T
9
E
N
G
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

Adjusted trade profit 1,069,700

Items not adjusted (05 for each of the four items) 2

(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

Profit chargeable to corporation tax 1,116,504


Franked investment income (18,000 x 100/90) 20,000 1

Profits 1,136,504

Thresholds divided by two (associated companies):


1,500,000/2 = 750,000
300,000/2 = 150,000 1
Broad Ltd must therefore pay tax at the full rate of 30%
Tax payable: 1,116,504 x 30% 334,951 1
Working:
Gain:
Proceeds 140,000
Cost (56,000) 05

84,000
Indexation allowance
0241 x 56,000 (13,496) 1

70,504 7

(iii) Broad Ltd payment of corporation tax


Broad Ltd is a large company and must therefore pay tax using the quarterly payment system.
334,951/4 = 83,738

7th month 14 October 2005 83,738 1


10th month 14 January 2006 83,738 1
13th month 14 April 2006 83,738 1
16th month 14 July 2006 83,738 1

FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com


Marks
(iv) The return is due 12 months from the end of the accounting period i.e. 31 March 2007 1
(v) Records must be kept six years after the end of the accounting period i.e. 31 March 2012 1
(b) Blocked VAT
VAT is blocked and therefore can not be recovered on the following items:
(1) Motor cars not used 100% for business purposes
(2) Business entertainment
(3) Expenses incurred on domestic accommodation for directors
(4) Non business items passed through the accounts
4

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

No taper relief: < 1 year


1,000
August 2000 Proceeds x 23,400 3,900
6,000
Cost (1,600)

2,300 15

Taper relief 4 years: 90%


2,000
FA 85 pool Proceeds x 23,400 7,800
6,000
2,000
Cost x 8,670 (4,335)
4,000

3,465 2

Taper relief 8 years (including the bonus year): 70%


Painting: Chattel sold at a loss for less than 6,000
Deemed proceeds 6,000
Cost (6,500)

(500) 15

Building Proceeds 160,000


Indexed cost (92,170)
Extension (19,000)

48,830 2

Taper relief 8 years (including the bonus year): 70%


18
6
D

E
N
G
A
B
P
a
p
e
r

T
9
E
N
G
6
D

E
N
G
A
C
P
a
p
e
r

T
9
E
N
G
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

18
(ii) Due date of payment: 31 January 2007 1

(b) (i) Patricia Chargeable gain 2005-06


Workshop Goodwill

Proceeds 160,000 80,000
Cost (40,000)

120,000 80,000 1


Total gains 200,000 1
Amount not reinvested (30,000)
1
Rolled over gain 170,000 1

Chargeable now 30,000


Net of taper relief 7,500 1

(75%: Business asset held > 2 years) 5


(ii) Base cost of asset
Market value 210,000
Rolled over (170,000)

40,000 1


Total 25

6
D

E
N
G
A
C
P
a
p
e
r

T
9
E
N
G
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Land is not an allowable cost 1


* 8,000
x 100 = 571% (less than 25%) 1
140,000
Year ended
Cost IBA

31 March 1997 140,000
WDA 4% (5,600) 5,600 1


134,400
31 March 1998
to
31 March 2005
WDA 4% x 8 years (44,800) 44,800 1

89,600
31 March 2006
Proceeds (130,000) 1

Balancing charge (40,400)


40,400 (40,400) 1

nil
8

(b) Norman Due dates of payment


Payment on accounts (POA) are due for 2005-06 based on the amount paid in 200405.
1st POA 31 January 2006 50% x 8,600 4,300 2
2nd POA 31 July 2006 50% x 8,600 4,300 2
Balance 31 January 2007 (10,400 8,600) 1,800 2

10,400

(c) Norman National insurance contributions


Norman must pay class 2 and class 4 national insurance contributions

Class 2: 52 weeks x 210 109 1
Class 4: 1st 4,895 nil 05
Next (32,760 4,895) x 8% 2,229 1
Remainder (42,000 32,760) x 1% 92 2,321 1

2,430 05

Total 18

20
6
D

E
N
G
A
A
P
a
p
e
r

T
9
E
N
G
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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
P
a
p
e
r

T
9
(
G
B
R
)
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Personal allowance 5,035


Company car benefit
The base level of CO
2
emissions is 140 grams per kilometre
Car fuel benefit
The base figure for calculating the car fuel benefit is 14,400
Authorised mileage allowances
All cars:
Up to 10,000 miles 40p
Over 10,000 miles 25p
Personal pension contribution limits
Annual allowance 215,000
The maximum contribution that can qualify for tax relief without any earnings is 3,600.
Official rate of interest
5%
2
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Registration limit 61,000


Deregistration limit 59,000
Capital gains tax: annual exemption
Individuals 8,800
3 [P.T.O.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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.
Calculations and workings need only be made to the nearest .
All apportionments should be made to the nearest month.
All workings should be shown.
4
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
ALL FOUR questions are compulsory and MUST be attempted
1 (a) Stephen, aged 47, married his wife, Rebecca, 14 years ago. Both Stephen and Rebecca work for the same
company. Stephen is a departmental manager and earns a gross salary of 47,000 per annum. Rebecca, who
was employed by the same company from 6 April 2006 onwards, is a sales manager and earns a gross salary
of 40,700 per annum.
Stephen received taxable non-cash benefits amounting to a total of 2,400 for the tax year 200607 and
bonuses of 4,000 paid in May 2006 and 5,000 paid in May 2007. These bonuses were paid in respect of
the companys accounting periods ending 30 November 2005 and 30 November 2006, respectively.
Rebecca received taxable non-cash benefits totalling 2,000, but did not receive any bonuses during the tax year
200607.
Stephen pays 5% of his gross salary each year into the company pension scheme. The company contributes an
amount equal to 2% of Stephens gross salary into the same scheme.
Rebecca is not a member of the company pension scheme. Instead, she pays gross contributions, equal to 8%
of her total gross employment income, into a personal pension plan.
During 200607 the company deducted income tax of 11,100 from Stephens earnings and 7,900 from
Rebeccas earnings, under PAYE.
Stephen and Rebecca received the following amounts of interest in the tax year 200607:
Stephen Rebecca

UK bank interest 240 160
National Savings Certificate interest 400
The amounts shown are the cash amounts received.
Stephen and Rebecca also have a joint building society account from which they received a total of 760 (after
deduction of tax) in interest for the tax year 200607.
Rebecca has also paid patent royalties amounting to 780 (cash amount paid) during 200607, in respect of a
former sole trader business, which had ceased in March 2006.
Required:
(i) Calculate the income tax payable by Stephen for the tax year 200607; (10 marks)
(ii) Calculate the income tax payable by Rebecca for the tax year 200607. (10 marks)
(b) Rebecca has recently received an amendment to her tax self-assessment for the year 200506 which says she
has underpaid tax of 1,350 and she intends to appeal.
She has asked you, as her tax advisor, to outline the appeals procedure.
Required:
Write a letter to Rebecca (using fictitious addresses) outlining the appeals procedure that she must follow.
Marks will be awarded for the style and presentation of your answer.
(10 marks)
(c) Rebeccas brother, Simon, intends to start a new business soon. He will lease a small workshop for business
purposes, paying a lease premium of 16,000 for a 16-year lease.
Required:
Calculate the amount Simon will be able to deduct each year from his business profits in respect of this
premium. (4 marks)
(34 marks)
5 [P.T.O.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
2 (a) Beach Ltd is a UK resident company manufacturing surfboards, water skis and other water sports equipment.
Beach Ltd is a registered company for value added tax (VAT) purposes.
Beach Ltd had the following capital transactions during the companys twelve-month accounting period ended
31 December 2006:
Purchases:
12 February 2006 A car costing 18,800 (note 2)
19 March 2006 A computer costing 4,935 (note 3)
30 October 2006 A delivery van costing 15,275
Disposals:
12 May 2006 A machine sold for 7,050. (note 4)
Notes:
1. All amounts shown are stated inclusive of VAT
2. The new car was for the sole use of a director who will use it 40% for business purposes and 60% for private
purposes.
3. The computer is to be treated as a short life asset.
4. The machine sold had originally cost 9,400 in August 2005.
5. The balance brought forward on the plant and machinery pool, for capital allowances purposes, on
1 January 2006 was 28,000.
6. Beach Ltd satisfies the conditions for small company status for capital allowance purposes.
Required:
Calculate the maximum capital allowances claimable by Beach Ltd for the twelve-month accounting period
ended 31 December 2006. (8 marks)
(b) Coastal Activities Ltd, which had been trading for the last fifteen years, decided to cease trading on 31 March
2007, because of falling profits and strong competition.
Coastal Activities Ltd had the following results in its last five accounting periods.
Year ended Year ended 9 months ended Year ended Year ended
30 June 2003 30 June 2004 31 March 2005 31 March 2006 31 March 2007

Trading profit 16,000 15,000 9,000 8,000
Trading loss (42,000)
Investment income 1,000 800 600 200
Capital gain 4,000 3,000
Capital loss (1,000)
Gift aid payment (100) (100) (100)
Required:
Calculate the final profits chargeable to corporation tax (PCTCT) for each of the above accounting periods,
on the assumption that Coastal Activities Ltd will claim the maximum loss reliefs available.
Note: You are NOT required to calculate the amount of corporation tax due or repayable.
(8 marks)
6
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
(c) Sea, Sand and Surf Ltd (SSS Ltd) is a UK registered company. SSS Ltd is registered for value added tax (VAT).
During the three-month period ended 31 December 2006, SSS Ltd carried out the following transactions:

Sales (exclusive of VAT, where applicable):


Standard-rated 120,000
Zero-rated 18,000
Purchases: (exclusive of VAT)
Goods for resale (all standard-rated) 58,000
Expenses (inclusive of VAT, where applicable):
Wages of staff 28,000
Electricity 3,525
Accountancy fees 1,410
Buildings insurance 940
Bad debts totalling 1,400 (exclusive of VAT) were written off during the above period. This amount comprised
two debts, one for 600, due to have been paid in May 2006, and one for 800 due to have been paid in July
2006.
Required:
Calculate the value added tax (VAT) payable or reclaimable by Sea Sand and Surf Ltd for the three-month
period ended 31 December 2006. (7 marks)
(23 marks)
7 [P.T.O.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
3 (a) Aaron made the following disposals of capital items in the tax year 2006-07:
15 June 2006: A bronze statuette was sold for 7,200. The statuette had originally cost 4,100 in May 2004.
14 August 2006: His entire holding of 12,000 shares in ABC plc, a UK trading company quoted on the stock
exchange, was given to his friend Adele. The shares had cost Aaron 6,600 in May 2001.
On 14 August 2006 ABC plc shares had a closing price of 140p152p. Marked bargains during the day had
been: 139p, 143p 148p and 155p.
Both the shares and the statuette were classed as non-business assets for the purposes of taper relief.
Aaron had unused capital losses of 800 brought forward from the tax year 200506.
Aaron had taxable income for 200607 of 38,000.
Required:
Calculate Aarons capital gains tax payable for the tax year 200607. (10 marks)
(b) Adele purchased a painting in May 2001 for 24,500. It was destroyed by fire in December 2006. Adele
received 29,000 compensation from an insurance company and immediately reinvested 28,000 in another
painting to replace the one destroyed.
Required:
(i) Calculate the chargeable gain arising in 200607; (3 marks)
(ii) State the base cost of the replacement painting. (1 mark)
(c) Vernon purchased a house, as his only residence, on 1 June 1997 and occupied it immediately. Between 1 May
1998 and 31 August 2006 Vernon was required, by his employer, to take up a temporary post in another UK
city. During this period Vernon let his house to tenants and occupied a flat, provided by his employer, near to his
temporary post.
On 31 August 2006 Vernon sold his house, without ever re-occupying it, and went to live with his mother in
Scotland.
Required:
(i) State, giving reasons, in respect of Vernons entire period of ownership, the dates of each period covered
by, or not covered by, either principal private residence (PPR) relief or letting relief;
Note: The calculation of PPR relief is not required.
(4 marks)
(ii) State how the maximum amount allowed for letting relief is calculated.
Note: You are not required to calculate the amount of letting relief available.
(3 marks)
(21 marks)
8
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
4 (a) Leon operates a small unincorporated business in Yorkshire. His most recent set of accounts was for the year
ended 31 October 2006 and showed the following results:
Notes
Gross operating profit 110,000
Add:
Interest received (net) 1 240
Rental income received 2 4,400

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)

Net profit per accounts 38,300

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:

Gross payments of salary to staff 34,508


Employers national insurance contributions 1,590
Drawings by Leon 26,500
Payments to Emily (Leons wife) 4,992

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:

Council tax for the flat 800


Business rates for the shop 1,200

2,000

9 [P.T.O.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
6. Donations during the year were made to the following:

Oxfam a registered charity (Gift aid) 200


A local church 100

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:

Running costs (including petrol) 2,400


Parking fines Leon 120
Staff 60
(both fines occurred whilst the individuals were
on business purposes)

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
10
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Answers
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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
13
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Tax liability 8,288


Less tax deducted at source:
Savings (675 x 20%) (135) 1
PAYE (7,900) 05

Tax payable 253 10

(b) Tax Advisors Ltd


Glasgow
12 June 2007
Reference: XXX
Rebecca
The Avenue
Glasgow
Dear Rebecca
Appeals procedure
Thank you for your recent letter asking for information regarding the appeals procedure for your recent tax
assessment.
The first step is to appeal to the HMRC inspector, in writing within 30 days. The appeal must state the
grounds on which the appeal is based. 2
You are required to pay the tax requested unless you also ask for the postponement of the tax at the same
time as the appeal is due. 2
If you do not agree with the inspectors decision the next step is to appeal to the commissioners. There are 1
two types of commissioners, the general commissioners who usually hear appeals based on straightforward 2
matters, and the special commissioners who generally hear appeals on more complex points of law.
A decision made on a matter of fact is final, but a decision on a point of law can be appealed further via the
court system. 2
You should bear in mind that you may have to meet all costs yourself as, even if you win, costs may not be
awarded. 2
If I can be of further assistance please do not hesitate to contact me.
Yours sincerely
Tax Technician
1 mark for each valid point maximum of 8
Marks may be awarded for other relevant points
Style and presentation 2

10

14
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Marks
(c) Simon Lease deduction
Amount taxable on landlord:

Premium 16,000
2% (16 1) x 16,000 (4,800) 2

Property business income 11,200 1

Simons deduction:
11,200 = 700 per annum 1

16 4

34

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

(b) Coastal Activities Ltd Profits chargeable to corporation tax


for the years ended 30 June 2003 to 31 March 2007
Accounting periods ended
30 June 30 June 31 March 31 March 31 March
2003 2004 2005 2006 2007

Trading profit 16,000 15,000 9,000 8,000 nil 1
Investment income 1,000 800 600 200 1
Capital gains 4,000 2,000 15

21,000 15,800 9,600 8,200 2,000
Loss relief S393 A(1) (5,250) (15,800) (9,600) (8,200) (2,000) 3

15,750 nil nil nil nil
Gift aid (100) wasted wasted 15
Profits chargeable to

corporation tax 15,650 nil nil nil nil 8

Loss memo: 31 March 2007 42,000


31 March 2007 (2,000)
31 March 2006 (8,200)
31 March 2005 (9 months) (9,600)
30 June 2004 (15,800)
30 June 2003 (21,000 x 3/12) (5,250)

1,150 wasted

15
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Wages outside the scope of VAT 05


Insurance exempt 05
Bad debt in July 2006 not six months old 05

23

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

Taper relief owned for five years 85%


* share value is lower of: 05
1/4 up
140p + 1/4(152p 140p) = 143p 1
or
Average
1/2(139p + 155p) = 147p 1
Tax payable:
Loss used against statuette disposal with the least taper

2,000 800 (capital loss brought forward) 1,200 1


10,560 x 85% (taper) 8,976 1

Chargeable gains 10,176


Annual exemption (8,800) 1

Taxable gains 1,376

Capital gains tax at 40% 550 1


10

16
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Marks
(b) (i) Adele Compensation receipt

Proceeds 29,000
Cost (24,500)

4,500
Chargeable now (amount not reinvested) (1,000)

Deferred to replacement 3,500 2

Taper relief 85% (five years)


Gain 1,000 x 85% 850 1

(ii) Base cost of new painting

Cost 28,000
Deferred (3,500)

24,500 1

(c) (i) Vernon Principal private residence relief


Period Chargeable Exempt Let Reason
1 June 199730 April 1998 x Owner occupied 1
1 May 199830 April 2002 x Working elsewhere in
UK maximum of 1
four years
HMRC will not
normally insist on
re-occupation for
periods involving
working elsewhere
in UK
1 May 200231 August 2003 x x Did not re-occupy
three years for any
reason does not apply 1
1 September 200331 August 2006 x Last three years of
ownership 1

(ii) Maximum letting relief


Letting relief is the lower of:
An amount equal to the principal private residence relief 1
The amount of the gain attributable to the letting period 1
A maximum amount of 40,000 1

21

17
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Adjusted trading profit 65,484

Items unadjusted
Staff salaries 05
Employers NIC 05
Business rates 05
Church donation 05
Trade debt collecting 05
Staff fines 05
Advertising/Telephones 05

14

Working 1

Paid 4,992
Equivalent amount due:
(16 x 40) x 650 per hour (4,160)

Adjustment required 832

(b) Leon National insurance contributions (NIC)


Class Calculation based on Payable to HMRC by
In respect of staff:
1 (primary) (Employee) Cash payments 19th of the month following payment to employee 2
1 (secondary) (Employer) Cash payments 19th of month following payment to employee 15
In respect of Leon:
2 Weekly rate of 210 Monthly or quarterly billing 15
4 Taxable profits less Payment on account 31 January in the tax year
loss relief claimed Payment on account 31 July following the tax year
Balance 31 January following tax year 3

22

18
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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.
P
a
p
e
r

T
9

(
U
K
)
Preparing Taxation
Computations
(UK Stream)
Tuesday 11 December 2007
The Association of Chartered Certified Accountants
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
This is a blank page.
The question paper begins on page 3.
2
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Personal allowance 5,035


Company car benefit
The base level of CO
2
emissions is 140 grams per kilometre
Car fuel benefit
The base figure for calculating the car fuel benefit is 14,400
Authorised mileage allowances
All cars:
Up to 10,000 miles 40p
Over 10,000 miles 25p
Pension scheme limits
Annual allowance 215,000
The maximum contribution that can qualify for tax relief without evidence of earnings is
3,600.
Official rate of interest
5%
3 [P.T.O.
7
D

U
K
T
T
P
a
p
e
r

T
9
U
K
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Registration limit 61,000


Deregistration limit 59,000
Capital gains tax: annual exemption
Individuals 8,800
4
7
D

U
K
T
T
P
a
p
e
r

T
9
U
K
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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.
5 [P.T.O.
7
D

U
K
T
T
P
a
p
e
r

T
9
U
K
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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
2
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)
6
7
D

U
K
P
A
P
a
p
e
r

T
9
U
K
7
D

U
K
A
A
P
a
p
e
r

T
9
U
K
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
(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)
7 [P.T.O.
7
D

U
K
A
A
P
a
p
e
r

T
9
U
K
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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)
8
7
D

U
K
A
B
P
a
p
e
r

T
9
U
K
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
(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)
9 [P.T.O.
7
D

U
K
A
B
P
a
p
e
r

T
9
U
K
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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)
10
7
D

U
K
A
C
P
a
p
e
r

T
9
U
K
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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
11
7
D

U
K
A
D
P
a
p
e
r

T
9
U
K
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Answers
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Strict statutory method


40,000 x (5% 1%) x 3/12 = 400
32,000 x (5% 1%) x 9/12 = 960

1,360 2

Mary would choose to be taxed on the figure calculated using the lower 1,360 05
strict statutory method
Car
CO
2
emission 196
Base figure (140)

56 05

Divided by 5 and rounded down 11 1


Starting percentage 15 05
Diesel addition 3 05

Final percentage 29

List price 15,000 05

Benefit 15,000 x 29% x 7/12 2,538 1


Contribution 20 x 7 months (140) 1

2,398 2,398

Fuel 14,400 x 29% x 7/12 2,436 15


(contributions are not deductible)
Cinema system
Use 4,000 x 20% 800 1
Gift Current market value 900 05

or
Original cost 4,000
less 20% for:
200304 (800)
200405 (800)
200506 (800)
200607 (800)

800 2

The higher amount is taken 900 1,700 1



Pension contributions exempt 1

16

Total benefits for 200607 7,894

(ii) AB (UK) Ltd must submit form P11D to HM Revenue and Customs (HMRC) in respect of Mary by
6 July 2007 2

15
7
D

U
K
I
X
P
a
p
e
r

T
9
U
K
7
D

U
K
A
A
P
a
p
e
r

T
9
U
K
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Employment income 72,550 72,550


Dividend (1,800 x 100/90) 2,000 2,000 1
Bank interest (2,400 x 100/80) 3,000 3,000 1
NSC interest exempt 05
Premium bond winnings exempt 05

Statutory total income 77,550 72,550 3,000 2,000
Personal allowance (5,035) (5,035) 05

Taxable income 72,515 67,515 3,000 2,000

Basic band extension: 33,300 + (780 x 100/78)= 34,300 1

1st 2,150 x 10% 215 05


Next 32,150 x 22% 7,073 05

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

Tax liability 22,424


Dividend credit (2,000 x 10%) (200) 05
Bank interest credit (3,000 x 20%) (600) 05
PAYE (21,400) 05

Tax payable 224 11

(c) Anita and Gregory Tax refunds


Anita
500 x 100/80 625
Personal allowance (5,035)

Taxable income Nil

Refund due (625 x 20%) 125 1

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)

Taxable income Nil

Refund due Nil 05

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

32

16
7
D

U
K
A
A
P
a
p
e
r

T
9
U
K
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

(Note the percentage of private use on the car is irrelevant)


(iii) United plc Corporation tax for the year ended 31 March 2007

Adjusted trade profit 256,000 05
Capital allowances (part ii) (53,000) 203,000 05

Property income (9,000 + 3,000) 12,000 1


Investment income (1,600 600) 1,000 1
Capital gain (part i) 26,889 05

Profits chargeable to corporation tax (PCTCT) 242,889


FII (9,000 x 100/90) 10,000 1

Profits 252,889

17
7
D

U
K
A
B
P
a
p
e
r

T
9
U
K
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

242,889 x 30% 72,867 1


(500,000 252,889) x
242,889
x 11/400 (6,527) 2
252,889

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)

1 December 200729 February 2008 15,000


1 March 200831 May 2008 21,000
June 2008 14,000 (42,000 x 1/3)
July 2008 14,000 (42,000 x 1/3)

64,000 2

The 61,000 VAT threshold is exceeded at the end of July 2008.


Athletic Ltd must notify HM Revenue and Customs (HMRC) within 30 days of the end of July 2008
i.e. by 30 August 2008. 1

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

25

18
7
D

U
K
A
B
P
a
p
e
r

T
9
U
K
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Marks
3 (a) Donald Chargeable gains for the tax year 200607
Shares Shares Cost

14 October 2000 4,000 6,000


18 May 2004
1 for 2 rights at 2.50 2,000 5,000 2

6,000 11,000
14 June 2006 disposal (4,000) (7,333) 1

2,000 3,667


Gain
Proceeds 18,000
Cost (7,333)

10,667 1

Taper relief 5 years = 85% 05


10,667 x 85% 9,067 05

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

Taper relief 8 years plus one bonus year = 9 years = 65% 1


142,400 x 65% 92,560 05

(note: the August 1997 extension is reflected in the April 1998 indexed cost)
Total gains for 200607: (9,067 + 92,560) 101,627 05


10

(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

Taxable gain 700

Basic tax band 33,300


Taxable income (33,000)

Balance remaining 300 1

Capital gains tax payable:

300 x 20% 60 05
400 x 40% 160 05

220 7

19
7
D

U
K
A
C
P
a
p
e
r

T
9
U
K
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Marks
(ii) The date of payment is 31 January 2008 1

(c) (i) Bernadette Chargeable gain for 200607

Proceeds (market value) 45,000 1


Cost (18,000) 05

27,000
Chargeable now (26,000 18,000) (8,000) 1

Gift relief 19,000 05

Taper relief = 25% 05


Chargeable gain:
8,000 x 25% 2,000 05

(ii) The base cost for Billy is:


45,000 19,000 = 26,000 1


23

4 (a) (i) Bobby Opening year assessments 200304 to 200607


Year 1 200304 Actual
1 February 2004 5 April 2004
2/16 x 24,000 3,000 15

Year 2 200405 Actual


6 April 2004 5 April 2005
12/16 x 24,000 18,000 15

Year 3 200506 12 months to accounting date


1 June 2004 31 May 2005
12/16 x 24,000 18,000 1

Year 4 200607 Current year basis


Year ended 31 May 2006 36,000 1

(ii) Overlap profits

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)

Overlap profits 15,000 1

Note: Other methods of calculating and illustrating the calculation of the overlap profits are acceptable.
20
7
D

U
K
A
C
P
a
p
e
r

T
9
U
K
7
D

U
K
A
D
P
a
p
e
r

T
9
U
K
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Marks
(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

(c) Tax Advisers


Glasgow
13 June 2007
Bobby Reference: xxx
23 The Avenue
Glasgow
Dear Sir
National Insurance Contributions (NIC)
Thank you for your letter dated 8 June in which you request details of your NIC obligations in respect of your
new salesman.
There are various classes of NIC of which class 1 and class 1A relate to employees. The employee himself
will suffer class 1 primary contributions and you, as the employer, will be liable to pay both class 1
secondary contributions on the employees cash earnings and class 1A contributions on any taxable non-cash
benefits the employee receives; the car in this instance. 15
The class 1 contributions will be worked out monthly, and paid to HM Revenue and Customs (HMRC) on or
before the 19th of the following month. Class 1A contributions will be calculated at the end of each tax year 2
and paid to HMRC by 19 July following the end of the tax year.
The employee primary contributions each month will be:

1st 420 nil


2,795 420 x 11% 261
3,000 2,795 x 1% 2

263 15

Your secondary contributions each month will be:

1st 420 nil


3,000 420 x 128% 330

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

20

21
7
D

U
K
A
D
P
a
p
e
r

T
9
U
K
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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.
P
a
p
e
r

T
9

(
U
K
)
Preparing Taxation
Computations
(UK Stream)
Tuesday 10 June 2008
The Association of Chartered Certified Accountants
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
This is a blank page.
The question paper begins on page 3.
2
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Personal allowance 5,225


Company car benefit
The base level of CO
2
emissions is 140 grams per kilometre
Car fuel benefit
The base figure for calculating the car fuel benefit is 14,400
Authorised mileage allowances: Cars
Up to 10,000 miles 40p
Over 10,000 miles 25p
Pension scheme limits
Annual allowance 225,000
The maximum contribution that can qualify for tax relief without evidence of earnings is
3,600.
Official rate of interest
625%
3 [P.T.O.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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 is increased to
50% for the period from 1 April 2006 to 31 March 2008 (6 April 2006 and 5 April 2008
for unincorporated businesses).
Industrial buildings
Writing down allowance 4
Corporation tax
Financial year 2005 2006 2007
Small companies rate 19% 19% 20%
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 1/40
Marginal relief
(M P) x I/P x marginal relief fraction
Value added tax

Registration limit 64,000


Deregistration limit 62,000
Capital gains tax: annual exemption
Individuals 9,200
4
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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 15,225 per year Nil
5,22634,840 per year 110
34,841 and above per year 10
Class 1 employer 15,225 per year Nil
5,226 and above per year 128
Class 1A 128
Class 2 220 per week
Class 4 15,225 per year Nil
5,22634,840 per year 80
34,841 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.
5 [P.T.O.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
ALL FOUR questions are compulsory and MUST be attempted
1 (a) Paul is aged 52 and has been married to Susan, who is 51, for the past twenty years. He works as a customer
relations manager for a large UK resident company. His annual salary is 42,000 and he has received bonuses
of 5,000 and 6,000 on 1 May 2007 and 1 May 2008 respectively. These bonuses were paid in respect of
the companys years ending 31 March 2007 and 31 March 2008.
In addition Paul received the following benefits in the tax year 200708:
The use of a company owned house for him and his family. The company purchased the house on 14 June
2004 for 159,000. Paul first moved into the house on 2 October 2006 when it had a market value of
260,000. Paul has occupied the house throughout 200708 paying rent to the company of 400 per
month. The rateable value of the house is 3,000. The house is not job-related. Paul pays for all of the
household expenses.
A payment of 45p per mile for the business use of Pauls own car. Paul received this for a total of 12,000
miles in the tax year 200708 of which 9,000 have been on business trips and 3,000 on travelling to and
from work. Pauls place of work is not temporary.
Workplace parking. This was calculated as worth 6 per day for each of the 215 days that Paul attended
work during the tax year 200708.
Free private medical insurance. This had cost the company 800 for the tax year 200708, it would have
cost Paul 960 if he had arranged the cover himself.
The use of a company owned computer. Paul has been provided with a computer to use at home for both
business and private usage. Paul estimated that the private usage amounted to 40% and the business usage
60%. The computer was first provided in May 2006 when it had a market value of 2,400 and Paul has
used it throughout the whole of the tax year 2007-08.
Pauls company deducted 9,280 income tax (PAYE) from Pauls income during the tax year 200708.
Pauls other income for the tax year 200708 was:
Bank interest 4,800
Dividends from UK companies 1,800
Building society interest 800
The bank interest is from an account held in joint names with his wife Susan and is the total amount due for
both Paul and Susan. The building society interest is from an Individual Savings Account (ISA). All three amounts
shown are the cash amounts received or credited to the accounts.
Paul paid 156 (net) to a UK registered charity under the gift aid scheme and a fee of 380 to an HM Revenue
& Customs (HMRC) approved relevant professional body, required for his position in the company. Both of these
payments were made during December 2007.
Required:
Calculate the income tax payable by Paul for the tax year 200708. (19 marks)
(b) Charlie owns a house, which he rents out fully furnished. It is not rented out as furnished holiday
accommodation.
The house had been rented for 800 a month for the two years up to 31 December 2007. The same family had
been occupying the house during this period and all the rent had been paid with the exception of the last amount
due for December 2007. Despite all possible attempts to recover this months rent it still remains unpaid and it
is doubtful that it will ever be collected.
From 1 January 2008 a new tenant occupied the property and the rent was increased to 880 per month. The
rent due for January 2008 and February 2008 was paid on time but the rent for March 2008 was not paid until
24 April 2008.
6
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Charlies expenditure in respect of the house was:
House contents insurance: 600 in January 2007 and 800 in January 2008. Both amounts were paid
in advance for the year to come.
Letting agents commission: 10% of the gross rents receivable (including those outstanding).
Minor repairs: 250 in August 2007
Water rates: 300 for the period 1 April 2007 to 31 March 2008.
A new entrance porch: 1,500 in June 2007
Charlie always claims wear and tear allowance for the furniture.
Required:
Calculate the amount assessable on Charlie in respect of business property income for the tax year
200708. (8 marks)
(c) Paul wants to start making contributions to a pension plan. His employer has advised him that they have an
HMRC registered occupational pension scheme that he can join. However, a friend has told him that both he and
his employer can contribute to a personal pension plan instead.
He has asked you, as his tax advisor, for information on the two forms of pension scheme. You have arranged a
meeting with Paul to discuss the information he requires.
Required:
Write brief notes, to be used at a meeting with Paul, explaining the following points:
The maximum contributions allowed per year.
The method(s) of him obtaining relief.
The tax effects, if any, of the company making contributions to the plans on his behalf.
Note: your answer should only cover the above points. You are not required to mention the rules on receiving
benefits on retirement.
(8 marks)
(35 marks)
7 [P.T.O.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
2 (a) ACC Ltd is a UK registered company. During its eight-month accounting period from 1 May 2007 to
31 December 2007 the company had the following trading results:
Note
Operating profit 940,000
Loan interest 1 20,000
UK dividends 9,000 29,000

969,000
Expenses:
Legal expenses 2 20,000
Administration costs 3 92,000
Loan interest 4 5,000
Overdraft interest 8,000
Depreciation 32,000
Motoring expenses 5 28,700
Wages 400,000
Donations 6 7,000
Staff pension contributions 7 30,000 (622,700)

Net profit 346,300

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.
8
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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)
10
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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
11
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Answers
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Tax liability 14,373


less tax deducted at source:
Dividend credit 2,000 x 10% 200 05
Bank interest credit 3,000 x 20% 600 05
PAYE 9,280 (10,080) 05

Tax payable 4,293 19

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

(Note: the market value in 2006 is not relevant)


Use of own car
Amount received 12,000 x 45p 5,400 05
Amount allowed 9,000 x 40p (3,600) 1,800 1

(Note: travel to and from work is classed as private motoring)


Workplace parking exempt benefit 1
Medical insurance cost to the company 800 1
Computer
Market value 2,400 x 20% 480 1
Business proportion 60% (288)

Benefit 192

53,242
Professional fees (380) 1

Employment income 52,862 10

15
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

35

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).
16
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Adjusted trading profit 297,333

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

11

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

Quarterly payments: 540,000 135,000


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

24

17
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

18,000 + 45,000 (9,143) 15

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.

Musketeer: 7,857 3,000 1,000 = 3,857 x 100% 3,857 25


Shares: 33,800 x 25% 8,450 05

12,307
Annual exemption (9,200) 1

Taxable gains 3,107

Tax payable:
Basic band 34,600
Used for income tax (33,900)

700 1

1st 700 x 20% 140 05


Next 2,407 x 40% 963 05

1,103

Due date of payment: 31 January 2009 1

18
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Marks
(b) (i) Sandra Chargeable gain

Proceeds 220,000
Cost (140,000)

80,000 1
Proceeds not re-invested (10,000) 1

Gain heldover 70,000

Taper relief business asset held for > two years 25% chargeable 05
Chargeable gain: 10,000 x 25% = 2,500 05

(ii) Sandra Heldover gain


The gain will be held over until the earliest of:
the sale of the plant and machinery; 1
the plant and machinery ceasing to be used as a business asset; and 1
the tenth anniversary of the purchase date of the plant and machinery. 1

21

4 (a) Sean, Lauren and Helena Trading profit assessments


Total Sean Lauren Helena

Year to 31 December 2006: 18,000 9,000 9,000 1


Year to 31 December 2007: 25,000 10,000 10,000 5,000 1


Sean and Lauren:
200607 Current year basis December 2006 9,000 05

200708 Current year basis December 2007 10,000 05

Helena:
200607 Actual basis
1 January 2007 5 April 2007
3/12 x 5,000 1,250 1

200708 Current year basis December 2007 5,000 1

Overlap profit: 1,250 1


(b) Nicole Use of trading loss


The loss in August 2007 occurs in the tax year 200708
Alternative uses are therefore:
Current and prior year 200708 1
(Section 64 Income Tax Act 2007) 200607 1
Either or both years in, any order 15
Against total income, before personal allowances 15
Carry forward 200809 onwards 1
(Section 83 Income Tax Act 2007) Against the first available trading profits from the same trade only 2

maximum 7

(Note: Candidates are not required to give section numbers and they are shown here for completeness only).
19
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

(ii) Yee-ling Tax point


The tax points for the transaction are therefore:
For the deposit of 400: 28 May 2007 (cash receipt) 1
For the balance of 2,600: 2 July 2007 (14 day rule) 1

(iii) Importance of determining the correct tax point


Any two of the following are acceptable:
To calculate the turnover for initial registration.
To include the sale in the correct VAT return.
To identify the correct rate of VAT (if there is a change).
To identify the correct category of VAT (zero rate, reduced rate, standard rate or exempt if there is a
change). 2

20

20
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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.
P
a
p
e
r

T
9

(
U
K
)
Preparing Taxation
Computations
(UK Stream)
Tuesday 9 December 2008
The Association of Chartered Certified Accountants
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Personal allowance 5,225


Company car benefit
The base level of CO
2
emissions is 140 grams per kilometre
Car fuel benefit
The base figure for calculating the car fuel benefit is 14,400
Authorised mileage allowances: cars
Up to 10,000 miles 40p
Over 10,000 miles 25p
Pension scheme limits
Annual allowance 225,000
The maximum contribution that can qualify for tax relief without evidence of earnings is
3,600.
Official rate of interest
625%
2
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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 is increased to
50% for the period from 1 April 2006 to 31 March 2008 (6 April 2006 and 5 April 2008
for unincorporated businesses).
Industrial buildings
Writing-down allowance 4
Corporation tax
Financial year 2005 2006 2007
Small companies rate 19% 19% 20%
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 1/40
Marginal relief
(M P) x I/P x marginal relief fraction
Value added tax (VAT)

Registration limit 64,000


Deregistration limit 62,000
Capital gains tax: annual exemption
Individuals 9,200
3 [P.T.O.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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 15,225 per year Nil
5,22634,840 per year 110
34,841 and above per year 10
Class 1 employer 15,225 per year Nil
5,226 and above per year 128
Class 1A 128
Class 2 220 per week
Class 4 15,225 per year Nil
5,22634,840 per year 80
34,841 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.
4
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
ALL FOUR questions are compulsory and MUST be attempted
1 (a) Peppy has worked in the London office of Pepster Ltd for the last ten years earning over 45,000 per year. On
1 August 2007 he was transferred to Pepster Ltds Newcastle office, which is nearly 300 miles away. As a result
Peppy moved house to the Newcastle area. During the tax year 200708 Peppy received the following benefits
from Pepster Ltd:
A 2000cc BMW car, which has a recommended list price of 28,000. The car has a CO
2
emission rate of
198 grams per kilometre and is petrol driven. The car was first made available to Peppy on 1 July 2007
and is used for both business and private purposes. Pepster Ltd paid for all the running costs of the car,
which amounted to 2,400 in the tax year 200708. Peppy paid 6,000 towards the cost of the car and
40 per month for the private use of the car.
A computer was provided throughout the whole of the tax year 200708. The computer is used for both
private and business purposes. The private use is estimated to be 40% of the total usage. Pepster Ltd paid
4,000 for the computer when it was first provided to Peppy in 200607.
To help with Peppys move to Newcastle, Pepster Ltd paid Peppy 10,000 in July 2007 towards his
relocation costs.
Nursery vouchers for an approved carer to the value of 70 per week were given to Peppy towards the cost
of nursery schooling for Peppys two young children. The vouchers were given for 40 weeks during the tax
year 200708. All other employees of Pepster Ltd are entitled to the same amount per week.
Required:
Calculate, for the purposes of income tax, the total value of the benefits provided to Peppy in the tax year
200708. (10 marks)
(b) Peppys wife Coral also works for Pepster Ltd and has provided you with the following information regarding her
income and outgoings for the tax year 200708:
Income
A gross salary of 38,000.
A bonus of 6,000 received in May 2007.
Benefits with a taxable value for income tax purposes of 2,500.
Dividends of 900 received from UK companies in August 2007.
Bank interest of 400 credited to her UK bank account in December 2007.
Building society interest of 360 credited to her individual savings account (ISA) in March 2008.
A prize of 2,400 from gambling on the national lottery.
Rental income of 4,800. This is the total taxable amount due for the tax year 200708 from a house
owned jointly with her husband.
Expenditure
A total amount of 120 paid to a UK charity under an approved give as you earn (GAYE) scheme,
administered by Pepster Ltd.
Personal pension contributions amounting to 3,900 (net) paid to an HM Revenue & Customs (HMRC)
registered pension provider.
Professional subscriptions of 180 to an HMRC approved professional body relevant to Corals employment.
Tax, amounting to 8,230, was deducted from Corals employment income under PAYE for the tax year
200708.
Required:
Calculate the income tax payable by Coral for the tax year 200708. (12 marks)
5 [P.T.O.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
(c) Coral is about to complete her 200708 tax return. She intends to submit a paper return and does not wish to
submit the return online.
Required:
(i) State which form gives details of Corals total taxable earnings and tax deducted for the tax year
200708, and by which date she must receive a copy of this form from Pepster Ltd; (2 marks)
(ii) State which form gives details of the cash equivalents of Corals benefits received for the tax year
200708, and by which date she must receive a copy of this form from Pepster Ltd; (2 marks)
(iii) State the latest date by which Coral must submit her tax return for the tax year 200708 to HM Revenue
& Customs (HMRC) to avoid having to calculate the tax herself. (1 mark)
(d) Peppy and Coral have recently purchased another property and have decided to rent it out to holidaymakers.
Required:
State the conditions that must be met for the property to be treated as a furnished holiday letting.
Note: you are not required to state the tax advantages of the property qualifying as a holiday letting.
(6 marks)
(33 marks)
6
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
2 Taps Ltd is a UK registered company with no associated companies. For its twelve-month accounting period ended
31 March 2008 Taps Ltd has provided you with the following information:
Trading profit of 1,000,000, fully adjusted for tax purposes but before capital allowances.
Non-trading interest of 20,000 was received from another UK company for the year ended 31 March 2008. In
addition, a further 2,000 owed at 31 March 2008 was received in May 2008.
Bank interest of 1,800 was paid to a UK bank for the year ended 31 March 2008. The interest was in respect
of a loan taken for non-trade purposes. A further 300 due at 31 March 2008 has still not been paid.
An unwanted office block was sold for 495,000 on 1 December 2007. Taps Ltd had purchased the office block
for 192,000 in September 1996. The office block was extended at a cost of 71,000 in May 1999. Solicitors
fees of 18,000 were incurred on disposal.
A gift aid payment of 4,000 was made in September 2007.
UK dividends, amounting to 63,000, were received on 14 November 2007.
On 1 April 2007 the balances on the general pool and a short life asset for capital allowance purposes were
284,000 and 10,600 respectively.
The following items of plant and machinery were purchased and sold in the year to 31 March 2008:
Plant was purchased for 80,000 on 1 May 2007. The plant is not energy saving.
A car for the directors use was purchased for 30,000 on 1 December 2007. The car, which is not low
emission, is used 30% for private purposes.
The short life asset, which had cost 19,000 in August 2006, was sold for 8,000 on 2 January 2008.
Plant, which had cost 63,000 in May 2006, was sold for 60,000 on 2 February 2008.
Taps Ltd is classed as a small business for the purposes of capital allowances.
Taps Ltd had a trading loss of 180,000 brought forward on 1 April 2007.
Required:
(a) Calculate the capital gain on the disposal of the office block in December 2007.
Note: indexation factors are:
September 1996 to December 2007: 0359
May 1999 to December 2007: 0262
(4 marks)
(b) Calculate the maximum capital allowances that Taps Ltd can claim for the year ended 31 March 2008.
(7 marks)
(c) Calculate the corporation tax payable by Taps Ltd for the year ended 31 March 2008, assuming that the
maximum capital allowances are claimed. (9 marks)
(d) State the dates by which Taps Ltd should pay its corporation tax and submit its corporation tax return for the
year ended 31 March 2008. (2 marks)
(22 marks)
7 [P.T.O.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
3 (a) Jenny made the following disposals of assets in the tax year 200708:
15 May 2007: A vintage car was sold for 44,000. This had been purchased for 28,000 in August 2002.
17 July 2007: A field was sold for 210,000. This had been purchased in September 1996 for 99,350 and
had an indexed cost of 105,000 on 6 April 1998.
14 September 2007: A painting was sold for 8,200 (net of expenses of 200). This had cost 3,100 plus
300 expenses in August 2003.
19 January 2008: A building was sold for 140,000. This had cost 160,000 in May 2002.
None of the assets are business assets.
Jenny has taxable income for income tax purposes of 50,000 for the tax year 200708.
Required:
Calculate Jennys capital gains tax payable for the tax year 200708. (11 marks)
(b) Lynette purchased a house on 1 January 1984 and immediately occupied it as her main residence. She has
recently written to you explaining that she sold the house on 31 December 2007 and is concerned that there
may be a capital gain on its disposal, as she has only lived in the house for ten of the twenty-four years that she
has owned it.
In her letter Lynette informed you that since 1984 her pattern of occupation and absence has been as follows:
1 January 1984 to 31 October 1989 Occupied the house.
1 November 1989 to 28 February 1996 Employed overseas and rented out her house.
1 March 1996 to 30 September 1997 Occupied the house.
1 October 1997 to 31 December 2002 Employed elsewhere in the UK and left her house empty
1 January 2003 to 31 July 2005 Occupied the house
1 August 2005 to 31 December 2007 Lived with her mother and left her own house empty.
Lynette did not have any other main residence during the twenty-four year period from 1 January 1984 to
31 December 2007.
Required:
Write a letter to Lynette, using fictitious addresses, explaining with reasons, why there is or is not a
chargeable gain on the disposal of the house.
Note: up to 2 marks may be given for the presentation of the letter. (10 marks)
(21 marks)
8
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
4 (a) Susan has been a sole trader for the last ten years, selling bathroom accessories. Susans most recent trading
results for the year ended 31 December 2007 are as follows:
Note
Gross profit 84,000
Expenses:
Wages 1 38,000
Shop rent 3,000
Electricity 2 4,400
Business rates 2,200
Depreciation 1,000
Car expenses 3 1,800
Bad debt written off 200
Parking fine 4 400
Legal fees 5 300
Donations to local trade association 100 (51,400)

Net profit 32,600

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.
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
(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
10
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Answers
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Divided by 5 and rounded down 11 1


Starting percentage 15 05

Final percentage 26

List price capital contribution


28,000 5,000 (maximum) 23,000 1
Benefit
23,000 x 26% x 9/12 4,485 1
Contribution 40 x 9 (360) 1

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

Total benefits: (4,125 + 2,808 + 320 + 2,000 + 600) 9,853 05


10

13
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Employment income 46,200 46,200


Bank interest 400 x 100/80 500 500 1
Dividend 900 x 100/90 1,000 1,000 1
Rent 4,800/2 2,400 2,400 1
ISA interest exempt 05
Lottery win exempt 05

Net income 50,100 48,600 500 1,000
Personal allowance (5,225) (5,225) 05

Taxable income 44,875 43,375 500 1,000


Extension of the basic rate band: 34,600 + (3,900 x 100/78) = 39,600 1
Tax payable:
Non-savings income
1st 2,230 x 10% 223 05
Next 37,370 x 22% 8,221 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

Tax liability 10,479


Dividend credit 1,000 x 10% (100) 05
Bank interest credit 500 x 20% (100) 05
PAYE (8,230) 05

Tax payable 2,049 12

(c) Coral Tax forms


(i) P60 31 May 2008 2
(ii) P11D 6 July 2008 2
(iii) 31 October 2008 1

(d) Peppy and Coral Furnished holiday letting


The conditions are:
The property must be let furnished on a commercial basis with a view to the realisation of profit. 1
During the relevant period the property must be available for letting for at least 140 days. 1
During the relevant period the property must actually be let for at least 70 days. 1
During the relevant period, the same tenant must not normally occupy the property for more than a
continuous period of 31 days. However, tenants may occupy a property for longer than 31 days provided
that the total of these periods do not exceed 155 days in any relevant period. 2
The relevant period is normally the tax year but will be the first 12 months of letting when the property is
first let. 1

33

14
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
Marks
2 (a) Taps Ltd Capital gain December 2007

Net proceeds (495,000 18,000) 477,000 1


Cost (192,000) 05
Extension (71,000) 05

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

Trading loss brought forward (180,000) 1

718,400
Non-trade interest
Receivable (20,000 + 2,000) 22,000 1
Payable (1,800 + 300) (2,100) 19,900 1

Gains (part a) 126,470 05

864,770
Gift aid (4,000) 05

Profits chargeable to corporation tax (PCTCT) 860,770


FII (63,000 x 100/90) 70,000 1

Profits 930,770

860,770 x 30% 258,231 1


1/40(1,500,000 930,770) x 860,770 (13,161) 2

930,770

Tax payable 245,070 9


15
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

22

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.

Painting 4,000 4,000 (1st part of loss) Nil 1


Field 105,000 16,000 (balance of loss) x 60% 53,400 15

Chargeable gains 53,400


Less annual exemption (9,200) 05

Taxable gains 44,200

Capital gains tax payable: 44,200 x 40% 17,680 1


11

16
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

21

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

Adjusted taxable profits 62,400

17
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com
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

Class 4: 1st 5,225 nil


(34,840 5,225) x 8% 2,369
(42,000 34,840) x 1% 72

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

(c) Fitz Assessable trading profits


200607 Current year basis Year ended 30 November 2006 18,000 1

200708 Balance of profits


Year ended 30 November 2007 20,000
Period to 31 January 2008 3,000

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)

VAT payable 35,699 05


24

18
FOR FREE ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com