Official BTC exam thread

mickeymacca

Bemsused, the FYA was relevant for both questions, as does the 3000 limit apply to cars brought before 1/4/09 which this one was, so after the private usage was deducted it would be 2250.....
also, the indexed gain does not apply to sole trader and partnership disposals (I think I am right on that)

reader

mickeymacca, i agree with what you have just said.

The indexation allowance of 0.366 was to do with the limited company in section 2.

bemusedstudent

reader wrote: »

mickeymacca, i agree with what you have just said.

The indexation allowance of 0.366 was to do with the limited company in section 2.

thanks, I realised it when i came to use it again in section 2 but didnt change it!

bemusedstudent

mickeymacca wrote: »

Bemsused, the FYA was relevant for both questions, as does the 3000 limit apply to cars brought before 1/4/09 which this one was, so after the private usage was deducted it would be 2250.....
also, the indexed gain does not apply to sole trader and partnership disposals (I think I am right on that)

thanks, glad i got the FYA and £3000 ok then, although i dont remember whether i put the reduced amount in the allowance column only like it should be or both.

accounts boy

I also got the same figure for the profit 43750 and 46250 for each partner, £8250 overlap profit for each.
Net Capital gain £167175 and then deducted enter's relief and annual allowance??? Can any one tell me about this capital gain figure please???? Did someone use 4/9*1000,000 relief as well??????????
Roll over relief 118500 and base cost £481500. Tax return date 28.02.12 and company can claim within 12 months after the filing date i.e 28.02.13 and also record to be kept for for 5 years 28.02.2018.Short term lease renewal is allowed up to 50 years which I totally forgot and not sure about share capital (I think this is disallowed?)

NickyW

In the second section what was the relevance of stating that the dividend income was received on the 17 October 2009?

kristina1980

can I ask what everyone did with the national insurance email with the partners. I think I explained it ok but I wasnt sure what to do with the allowances as it was a partnership, should I have allowed two lots as it was two indivuals. I know we didnt have to show workings but I dedcided to be clever (stupid me).

also what did everyone do with the goodwill income in 1.2

this is my second go at this exam aswell and im sure ive failed. Already have my qualification but would be good to get this unit!

kristina1980

NickyW wrote: »

In the second section what was the relevance of stating that the dividend income was received on the 17 October 2009?

I dont think there was any relevance, i think it was designed to throw us! anyone please feel free to contact me if i am incorrect.

kristina1980

feel so stupid, i know i have made lots of silly mistakes that I know not to do. exams really stress me out and play with my head.

reader

I remember using entrepreneur's relief and annual exemption allowance (£10,100) in section 1 for the sale of the business. I included goodwill and factory when I calculated entrepreneur's relief.

For the NIC letter I think each partner does get their own allowance, i.e. £5,715.

I don't see the relevance of the date, other than to confirm that the dividend does relate to the accounting period.

I think books and records for limited companies need to be kept for 6 years from the year end, so if the year end was 28/02/2010 then the books and records for that period would have to be kept until 28/02/2016(?)

reddwarf

I was surprised how many questions were dates based, I was hoping for more numerical questions. Seems rather a waste not testing the practical application of the BTC rules rather than testing stuff that in practice you would ring up HMRC to find out if you didn't know!!

The dates etc., are in the syllabus so I shouldn't have been surprised - but I was!! Live and learn eh??

kristina1980

reader wrote: »

I remember using entrepreneur's relief and annual exemption allowance (£10,100) in section 1 for the sale of the business. I included goodwill and factory when I calculated entrepreneur's relief.

For the NIC letter I think each partner does get their own allowance, i.e. £5,715.

I don't see the relevance of the date, other than to confirm that the dividend does relate to the accounting period.

I think books and records for limited companies need to be kept for 6 years from the year end, so if the year end was 28/02/2010 then the books and records for that period would have to be kept until 28/02/2016(?)

Thanks reader, I had a feeling that I had got the National insurance allowances wrong. just hope I get a few marks for my explanation.

Primble

reader wrote: »

I remember using entrepreneur's relief and annual exemption allowance (£10,100) in section 1 for the sale of the business. I included goodwill and factory when I calculated entrepreneur's relief.

For the NIC letter I think each partner does get their own allowance, i.e. £5,715.

I don't see the relevance of the date, other than to confirm that the dividend does relate to the accounting period.

I think books and records for limited companies need to be kept for 6 years from the year end, so if the year end was 28/02/2010 then the books and records for that period would have to be kept until 28/02/2016(?)

completly forgot about entrepreneur relief

mickeymacca

Can't remember how the question was worded, but I omitted entrepreneurs relief as well as it did not state whether the partner was eligible ( exams should n't be there to trip you up with ambiguous questions). Also the legal costs for share capital I would think would be disallowable as well as it is capital rather than revenue in nature. ( not 100% on that though).

reader

because part/all of the business was being disposed I decided to use entrepreneur's relief, although I may have been wrong to.

jojoscottison

I remembered about this question they mentioned that you don't have to calculate the capital gain tax? only need to calculate the assessable capital gain. Was I wrong then?
Or I missed something?

reader

I also remember the question saying don't calculate tax payable just calculate the gain.

So I used entrepreneur's relief to calculate the gain; but I didn't multiple the gain by 18% to find tax payable.

jojoscottison

I don't really understand what they are testing here? to test if we know good will is also chargeable gain? also if they want us to use entrepreneur's relief,they should make it very clear.
The last question about the rollover relief , I cannot see any point to calculate the right amount of capital gain the company need to pay ,because £460000 is only a market value ,and this email has nothing to do with the indexation allowance.Anyway , I still added a few sentences to explain the actual captial gain is £118500 instead of £210000.

reddwarf

On the point of the legal costs in the ltd co's adjusted profits, did anyone get this covered in their lectures? We didn't and nor was it covered in either osborne or bpp text books. Only as a reference to costs on buying property being capital expenditure and long leases capital too. I would have thought legal costs would be a pretty significant area to cover????

I actually left the employee and lease costs in and added the share issue costs. Seems to me employee embelzelment and short lease could be seen as costs resulting from trading, ie revenue...but who knows - only HMRC??

Or does anyone else out there knowl???

reader

"The following expenses are allowable: the legal costs of renewing a short lease......"

"If they [legal expenses] relate to a revenue item, such as the collection of trade debts or employee issues such as drawing up contracts of employment, then they will be allowable".

"If they [legal expenses] relate to a capital item, such a the purchase of a building, then the expenses will be disallowed"

As per Kaplan's business tax book.

reddwarf

Thanks reader, Kaplan often get a bit more details in to their text books.

reader

Tell me about it, there Btax book is a beast, 468 A4 pages, double sided

jojoscottison

I seem to remember the legal cost in the exam is about the 15 years lease, which I think it's a capital cost ,not allowable;also another legal cost is about issuing new shares, which I think it's a capital cost as well,not allowable either.

reddwarf

jojoscottison wrote: »

I seem to remember the legal cost in the exam is about the 15 years lease, which I think it's a capital cost ,not allowable;also another legal cost is about issuing new shares, which I think it's a capital cost as well,not allowable either.

You made me chuckle! I've used Kaplan for other units, they certainly cover the syllabus!! I didn't like the layout much. I think somewhere between Kaplan and Osborne is best for details but the Osborne layout is good.

jojoscottison

15 years lease is certainly not a short lease, that's why I think it's capital cost.

reddwarf

The impresson I have (wrongly it seems) is that 15 years is short and 99 years is long... In our text books and lectures 'long and short' were used to describe the leases - I should have asked for clarification!

I was chuckling at Reader's comment about the Kaplan BTC book not your comment about leases (a very serious matter ;-)

reader

"The following expenses are allowable: The legal cost of renewing a short lease (i.e. 50 years or less)."

That is a word-for-word quote from Kaplan's business tax book, page 16, Finance Act 2009

accounts boy

Short lease renewal up to 50 year is allowed

reddwarf

Thanks for clarification peeps

zakira

I am a bit confused by this lease business. How can 50 years or less be a short lease. I mean 49 years is a long time almost a life time. If you have a lease for that lenght how can it not be long. I did the BTC exam on Tuesday. I rushed a bit and did not read things though enough I think.. Did they actually call it a short lease because a read it and assumed it was a long term lease. But I may have just assumed that because long term leases have come up in the past papers.