BTC EXAM - MY ANSWERS - ARE THERE ANY TUTORS TO GIVE FEEDBACK PLEASE

Task 1.1

The tax return was due to be fled on the 21/12/2003 and the late penalty for not doing so is £200 + 10% of the tax payable with interest

Task 1.2.

I got a net business profit of £56,460 on the return.

Task 1.3.

Net Profit £46,400
Depreciation (£1,200)
Motor Expenses (£2,160)
Capital Allowances (£2,480)
Adjusted Schedule DI £46,920

Task 1.4.(a)

I got 3/12 x £46,920 = £11,730

Task 1.4.(b)

I got 9/12 x £46,920 = £35,190

Task 1.5.

I got £11,730 + (£35,190/2) = £29,325

Task 1.6.

Class 2 - £2.05 x 52 weeks = £106.60
Class 4 - (£29,325 - £4,745) x 8% = £1966.40
Total NIC Payable = £2,073

Task 1.7.

Than you for your email dated 04/12/2005.

Please note that industrial building allowances only apply to building that are used for industrial purposes.

Industrial Building Allowances for new buildings

IBA's are given to new industrial buildings from the date that the building is brought into for industrial use. The IBA is only given for the first 25 years and it is only given on the eligible cost (original cost). So for the building you are looking at the IBA would be £2,000 per year for 25 years. The allowance would then come off your taxable income , just like capital allowances do, thus reducing your profits chargeable to tax.

Industrial Building Allowances for second purchaser

For second buyers of an industrial building the IBA is calculated on the original cost (i.e. what the seller paid for it when he first bought it) over the remaining life. So for the building you are looking at the IBA is £2,500.

I hope this answers your queries.


Kind Regards

AAT Student

Task 2.1.(a)

I got the WDA as £450 (£3,000 x 9/12 x 0.20)

The FYA was at 50% and came to £8,750.

The total capital allowances was £9,200

Task 2.1.(b)

Adjusted Trading Profit £25,000
Capital Allowances (£9,200)
Schedule D Adjusted Profit £15,800

Task 2.2.

Proceeds £25,000
Cost (£10,000)
Gain £15,000
Taper Relief (£15,000)
Gain / Loss on Disposal £0

Task 2.3.

Schedule D £15,800
Schedule A £4,500
PCTCT £20,300

Task 2.4.(a)

£20,300 x 19% = £3,857
M.R. (£50,000 - £20,300 X 19/400) = (£1,411)
C.T. Payable on 31/07/2005 £2,446



Task 2.4.(b)

£20,300 x 19% = £3,587 C.T. Payable on 31/07/2005

Task 2.5.

Purchasing of an associate company will affect the tax computation for Harrison Ltd. This is because, both, the upper and lower tax limits will be divided equally between Harrison Ltd. and the associate company.

So the tax brackets would be:

£1,500,000 = £750,000
£300,000 = £150,000
£50,000 = £25,000
£10,000 = £5,000

So, for example the corporation tax payable for the period ended 31/12/2005 would be £3,634 (see calculation below) instead of £2,446, thus in creasing the tax payable

£20,300 x 19% = £3,857
M.R. (£25,000 - £20,300 x 19/400) = £223
C.T. Payable = £3,634


However, it all depends on the profits for the next tax year.

I hope this helps.

Regards

Accounting Technician