Btc - Jun 08/dec 07 So Many Mistakes In Aat Answers!!!

anniem

I'm trying really hard to revise and go through practice papers, but finding it difficult as, when I review my work the answers in the 'official model answers' are WRONG!

I'm fast losing faith ..... OK ..... I go to the exam, sit my paper and then it goes off for marking, sounds OK, but if they are using the WRONG answers then I'll never pass!!!!!

I know there is already a post regarding Section 2 of the June 08 paper, but there are also discrepancies which carry forward from Task 1.3 (a) the profit is stated in the answer sheet as £58,028, when the question paper tells you it is £58,060!!!

In December 07 Task 2.2 requires you to calculate the IBA on a property original purchase price of £140,000. But the answer hasn't taken off the IBA claimed by the previous owner and provides you with an IBA over an eight month period of £9,825 - if you calculate this back, it gives you an original purchase price of £368,438! (£9,825/8 months) x (25 years x 12). Unless I have seriously misunderstood this topic, which is always a possibility.

This is crazy - I'm beginning to feel like I'm going mad!!!!!!!!

I hope they have the correct answers for marking this year's papers - but I'm not confident as there seem to be discrepancies year after year!

I wish these were reviewed more efficiently!

Help ... just let me know I'm not going mad .....

A x:confused1:

Kairi

I agree with you!! I have found the exact same things plus in Dec 07 BTC task 2.1 the WDA for Volvo is £2000 (which is fine) but in allowances column it should be apportioned for the business use only (ie 70%) but it says £2000 there as well.

anniem

I did that too, but decided I had got it wrong; because I thought I read somewhere that the private element would be taxed to the individual.

This would make the Capital Allowance Claim correct, as 100% would be claimed by the company, but the 30% private use allowance would be claimed back from the individual.


I think ..... perhaps someone else can clarify?

Thanks for replying - it's not just me then!!!!!

A x

Kairi

ahh.. I just read the chief assessor's report for dec 07 btc. And this is what is says about IBA

"Industrial building allowance has been a problem for students since the first exam for this unit, and it
continues today. This task was really quite basic, as the suggested answer shows, but many candidates
produced the most complex answers, involving residual values, and all manner of comparing £250,000 with
£140,000. Far too many candidates used 4% as the allowance, failing to show any understanding of the
circumstance in which the 4% can be used."

This means I have learnt it wrong. Can someone please explain why I am taking the full original cost of the building to calculate IBA for the new owner?

anniem

I took the original cost of the building= 140,000

I found 4% being the IBA claimable per annum for 25 years= 5,600 claimable per annum

Previous owner took 15 1/2 years = 86,800

therefore 9 1/2 years remain = 53,200

(86,800 + 53,200 = 140,000)

9 1/2 years = 114 months

53,200/114 = 466.67

466.67 * 8 month period = 3,733

---

Calculating back the other way:

One year = 3733/8 x 12 = 5,600

25 years = 5,600 x 25 = 140,000 ie original price

---

Have I done something wrong?

A x :confused1:

anniem

I'm learning from the BPP book ......

A

2cool

anniem wrote: »

I took the original cost of the building= 140,000

I found 4% being the IBA claimable per annum for 25 years= 5,600 claimable per annum

Previous owner took 15 1/2 years = 86,800

therefore 9 1/2 years remain = 53,200

(86,800 + 53,200 = 140,000)

9 1/2 years = 114 months

53,200/114 = 466.67

466.67 * 8 month period = 3,733

---

Calculating back the other way:

One year = 3733/8 x 12 = 5,600

25 years = 5,600 x 25 = 140,000 ie original price

---

Have I done something wrong?

A x :confused1:

I did this but the answer says something completely different. I did the same calcualtion on a different exam and the answer was correct. Am extremely confused and the exam is on tuesday :mad2::thumbdown::001_unsure: Do you think it will be better to go into an exam and do it your way above?

anniem

I'm going to stick to doing it my way ... ultimately by calculating the answer back the other way, you should end up with the original purchase price - or the whole equation doesn't make sense.

ie. Original purchase price x 4% x 25 years = Original purchase price!

100 x 4% = 4

4 x 25 = 100

Therefore, if you calculate back from your answer and end up with something other than the original purchase price it has to be wrong ... you are either getting too much or too little relief on your building.

I'm not going to try and change what I have learnt at this stage, I'll just get confused on Tuesday if I try that and there is too much else to remember.

I just wish the AAT model answers were helpful and not confusing the issue - it's hard enough trying to learn from the books with their mistakes and dire indexes, especially when the rules do vary between the different elements; ie capital allowances on cars; these do vary between individuals (sole/partnership) accounts and company accounts!!! (I went back and checked the books Kairi - private use element is taken off sole traders and partnerships, but you ignore it for capital allowances in companies.)

It does make you panic that you have missed an 'essential element'.

Ultimately I have been advised by my tutor to just keep working with your own figures, use them consistently, apply the techniques you have learnt and SHOW YOUR WORKINGS.

If you show your workings and the technique is correct you can get a mark even if the answer is wrong, if you have a wrong answer and no workings then you get no marks.

Just write down everything that goes through your brain -even if, like me, your brain feels completely frazzled!!!

I'm very trying!!!!!!

anniem

Kairi wrote: »

ahh.. I just read the chief assessor's report for dec 07 btc. And this is what is says about IBA

"Industrial building allowance has been a problem for students since the first exam for this unit, and it
continues today. This task was really quite basic, as the suggested answer shows, but many candidates
produced the most complex answers, involving residual values, and all manner of comparing £250,000 with
£140,000. Far too many candidates used 4% as the allowance, failing to show any understanding of the
circumstance in which the 4% can be used."

This means I have learnt it wrong. Can someone please explain why I am taking the full original cost of the building to calculate IBA for the new owner?

Question: Do they go back and double check THEIR OWN ANSWERS ARE CORRECT when 'too many candidates' seem to have incorrect answers?????

imeldabye

IBA- still looking for the answers

This is from HMRC's website

Example Jackson builds a building in 2004 at a cost of £2 million excluding the land and brings it into use on 1 January 2005. The use is qualifying use. The annual WDA is £80,000. Jackson sells it to Green on 31 December 2009 for £1.5 million. The residue of qualifying expenditure after sale is £1.5 million. The period of 25 years beginning with the date on which the building was first used ends on 31 December 2029. There are 20 years of that period left when the building is sold. The WDA for a chargeable period of 12 months is therefore £1.5 million x 1 year / 20 years = £75,000

Therefore surely the method is: take the residue of qualifying expenditure (ie orginal cost less any WDA already used up) and divide by number of years/months to give the allowance for the new owner per year (pro-rated if period < or > 12 months)

So relieved - I did the 2007 paper yesterday for the first time and thought I was going mad when I looked at the model answers.

cs_1988

Rules have changed since those exam guys, your doing it correct!

anniem

Hi CS 1988, thanks for the last - I suppose it's when rules change that doing past exam papers ceases to be helpful!!!!! :001_tt2:

richards0l0

Dec 07 btc 2.1 does anyone know why the full wda has been taken as capital allowance which is £2000 for the volvo car, completely forgetting about the 70% private use element??

anniem

It's a company not sole trader/partnership, therefore the private use element is taxed on the individual's tax return, not through the company, whereas for a sole trader/partnership the trader(s) is/are responsible for all tax liabilities anyway!

Hope this helps - I'll be taking the exam with you on Wednesday, so fingers crossed.

Annie

Thelma

It's because private usage is irrelevant for company cars.
You only need to adjust WDA for private usage when dealing with sole traders' cars if they are partly used for private purposes.

richards0l0

Thanks for that, trick question, as if it isn't already hard enough!! My btc exam is tommorow/tuesday i would double check if were you!!!