Personal tax - capital gains question

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Kelly7
Kelly7 Registered Posts: 218 Beyond epic contributor 🧙‍♂️
Hi

I've been going through some of the green light questions and I'm a bit confused by the answers given in the capital gains questions for 9 and 10 (2013). They were both questions where the proceeds were less than the cost and we deem the proceeds to be £6000 but for question 9 they did not deduct the commission charge along with the cost but with question 10 we did. I thought we was supposed to but question 9 has really threw me now and I'm questioning everything (which I'm doing a lot of after failing this exam twice.

Can anyone help? I would screencap and post the questions and answers on here but I'm not sure how to do that? If that would help does anyone know what I do?

Thank you for any help you might have on this.

Kelly

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  • flapper84
    flapper84 Registered Posts: 5 New contributor 🐸
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    Hi Kelly,

    I just had a look but I believe the questions are always shown in a different order on the green light tests so will need to see the individual question to help!

    Try to stay positive and focus on the ones you got right as well as the ones that just need a little tweak :smile:
  • Kelly7
    Kelly7 Registered Posts: 218 Beyond epic contributor 🧙‍♂️
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    Thanks Flapper. I have done it twice now and got different questions wrong and right on both, I walked out and realised some and don't think I'm failing by LOADS but its obviously enough and I think I need to do as well as I can on the actual questions like this as I know I will fall down on my written questions.

    I've found the same problem with this question and it's allowed me to copy it...

    Tim sold a painting at auction for £4,500 after 10% auction commission. The painting had originally cost £7,00
    The gross sale proceeds of the sale were £5,000
    and the capital loss on sale was £1,000

    I can see where the gross sale proceeds have come from but I worked out the capital loss as...

    Deem proceeds as £6,000
    Less cost £7,000
    Less Commission £500
    =£1,500 loss.

    Other questions I've done and my teacher has said that we do take the extra costs off. If anyone can help with this I would be really grateful.

    Kelly
  • Kelly7
    Kelly7 Registered Posts: 218 Beyond epic contributor 🧙‍♂️
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    BTW - The actual answers are what I've put in bold next to the question.
    x
  • flapper84
    flapper84 Registered Posts: 5 New contributor 🐸
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    Kelly,

    The answer assumes that the auction commission should be deducted before the sale proceeds are deemed to be £6000. Can anyone clarify is this is an error within the question?

    These are the workings according to the answer:

    Actual proceeds £5000
    Less auction commission (£500)
    Proceeds less costs £4500
    Deemed sale proceeds £6000*
    Less purchase (£7000)
    Capital loss (£1000)

    *deemed proceeds 6k due to non wasting chattel rules
  • MarieNoelle
    MarieNoelle Registered, Moderator Posts: 1,368
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    I too would have thought the commission fees were an allowable deduction as a cost of disposal:
    http://www.legislation.gov.uk/ukpga/1992/12/section/38/enacted

    and I would have accounted for it after the deemed proceeds.

    Maybe someone more knowledgeable can explain?
  • Kelly7
    Kelly7 Registered Posts: 218 Beyond epic contributor 🧙‍♂️
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    My teacher told me Thursday that it must be wrong because we are definitely supposed to deduct the cost after the 6000 deemed rule. But annoying as I have had the same in another question but I think I'll just have to go with what she has said if I get it in a question.

    Thanks for the replies guys. X
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