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Professional Level – Options Module Paper P6 (IRL) Advanced Taxation (Irish) December 2013 Answers
1 ABC & Co Chartered Certified Accountants, Any Street, Any Town 5 October 2012 Ken and Lucille Rogers, Any Street Any Town Dear Mr and Mrs Rogers, Re: Tax issues arising on the disposal of County Radio Ltd Further to our recent meeting the following is the position with regard to the queries raised.
(i) Options regarding the sale of the Limerick business premises The building is not a new building and no significant development has taken place. There are therefore no value added tax (VAT) implications in relation to the proposed sale. The sale (at market value) of the above premises by the company will trigger a capital loss of €150,000. Option (i): Sale to yourselves If the Limerick business premises are sold by the company to persons who have control of it (i. yourselves), this will constitute a loss arising on a disposal between connected persons. The loss of €150,000 will be ‘ring-fenced’ and it will not be possible to use it to reduce the tax payable on the gains arising on the disposal of the other company assets (namely goodwill). This is a significant tax disadvantage which will result in additional tax on the company’s chargeable gains at a rate of 30% amounting to €45,000, and a corresponding reduction in the amount available for distribution to yourselves, as shareholders. In addition, stamp duty at 2% of the value (i. €2,000) will be payable by yourselves as transferees, if you choose to buy the building from County Radio Ltd. Option (ii): Sale to an unconnected third party In the event that the building is sold by the company to an unconnected third party on the open market, the €150,000 loss will be allowable to shelter the capital gain arising on the disposal of goodwill by the company. Recommendation Option (ii) is recommended for the reasons outlined above.
(ii) Maximisation of after-tax proceeds (1) Eligibility for relief(s): Ken Retirement relief can apply to the disposal of shares in a family trading company, provided certain criteria are met. In this situation Ken meets the following criteria: - he has worked with the company for ten years; - he has been a full-time working director for more than five years; - the relevant shares have been held for more than ten years; - he has reached the minimum age of 55; and - the proceeds of disposal are clearly less than €750,000. The liquidation of County Radio Ltd is a chargeable event for capital gains tax (CGT) purposes whereby the shareholders are effectively disposing of their shares and receiving a capital distribution. However, a strict interpretation of tax law indicates that retirement relief would not be available as the individual would not be disposing of shares in a trading company; the company immediately prior to the liquidation would simply hold cash. Tutorial note: The Revenue will, by concession, allow retirement relief to be claimed if the company is liquidated no more than six months after the sale of the business. An alternative answer, allowing retirement relief on that basis is also acceptable. Lucille Lucille does not qualify for retirement relief, as she has never worked for the company. Cork premises The sale of the personally held Cork business premises by Ken will not qualify for retirement relief because it is not being sold in conjunction with a sale of the shares in County Radio Ltd.
However, if the self-correction option is not availed of within the above time limits, and the company has not been notified of a revenue audit, they may make an unprompted voluntary disclosure to the Revenue. In that scenario, it is likely that the reduced penalty rate of 10%, applicable to deliberate behaviour, would apply. It is therefore strongly recommended that action is taken with regard to this issue as soon as possible.
Please do not hesitate to contact us if you have any further queries.
Yours faithfully
T Consultant Tax Senior ABC & Co
Appendix
Schedule 1: Tax payable at the company level
(i) Tax on company capital gains
Gain/(Loss) € € Limerick business premises (assume disposal to a third party) Proceeds 100, Cost (250,000) –––––––– Capital loss (150,000) Goodwill (disposal to Southern Media plc) Proceeds attributable to goodwill (note 1) 340, Cost 0 –––––––– Taxable gain 340, –––––––– Total taxable gains less allowable losses 190, –––––––– Corporation tax on gains at an effective rate of 30% 57, Note 1 Proceeds attributable to goodwill € Total proceeds receivable for Southern Media plc 400, Less: Proceeds attributable to specific assets Equipment (60,000) –––––––– Proceeds attributable to goodwill 340, ––––––––––––––––
(ii) Corporation tax payable on balancing charge
€ Equipment Sales proceeds 60, Less: Tax written down value (50,000) –––––––– Balancing charge 10, –––––––– Corporation tax on balancing charge at 12·5% 1, –––––––– Total corporation tax payable (€57,000 + €1,250) 58, ––––––––
Schedule 2: Calculation of liquidator’s distributions
€ € € Proceeds from disposal to Southern Media plc 400, Proceeds from disposal of Limerick business premises 100, Proceeds from the collection of trade receivables 23, Cash balance 46, –––––––– 569, Less: Liabilities Tax on disposal of the business 58, Repayment of bank loan 150, Repayment of trade payables 15,000 (223,250) –––––––– –––––––– Liquidator’s distribution 345,
Distribution to Ken Rogers 60% 207, Distribution to Lucille Rogers 40% 138,
Schedule 3: Calculation of net after-tax proceeds
Tax payable at shareholder level on the liquidation of the company
€ € € Ken Rogers Proceeds from deemed disposal of shares 207, Cost 3, Indexation factor (2000/01) 1·144 (3,432) –––––– –––––––– Gain 204, Annual exemption (1,270) –––––––– Taxable 202, ––––––––
CGT payable by shareholder 30% 60,
Lucille Rogers Proceeds from deemed disposal of shares 138, Cost 2, Indexation factor (2000/01) 1·144 (2,288) –––––– –––––––– Gain 136, Less: Annual exemption (1,270) –––––––– Taxable 134, ––––––––
CGT payable by shareholder 30% 40,
Tax payable on disposal of Cork business premises by Ken Rogers
€ € Proceeds 200, Cost 100, Indexation factor (2002) 1·049 (104,900) –––––––– –––––––– Gain 95, ––––––––
CGT payable by shareholder 30% 28,
Summary of net after-tax proceeds
Gross Net proceeds Tax after tax € € € Ken Rogers: Shares 207,450 (60,824) 146, Ken Rogers: Cork business premises 200,000 (28,530) 171, –––––––– ––––––– –––––––– 407,450 (89,354) 318, –––––––– ––––––– ––––––––
Lucille Rogers: Shares 138,300 (40,423) 97, –––––––– ––––––– ––––––––
- Split-year relief Where an individual, who was not resident in the State for the tax year prior to arrival, arrives in the State with the intention that they will be resident in the State in the following tax year, then they will be treated as being resident in Ireland only from the date of arrival. In effect, this means that the individual will not be liable to Irish income tax in respect of any foreign employment income arising prior to the date of arrival. Split-year relief applies only to income from employment (excluding directors) and does not affect the liability of the taxpayer in respect of his/her other sources of income (ii) Based on the scenario outlined, it is expected that:
- Hank will meet the criteria set out in part (i) and so will be able to claim the SARP relief for the duration of his secondment in Ireland (from 1 April 2012 to 31 December 2015 inclusive) and if he avails of the additional year to 2016, it would also qualify for relief as the secondment period would be less than the maximum permitted five years (see (viii) above).
- Hank will also qualify for split-year relief in his year of arrival, which means that his USA salary from January to March 2012 will not be subject to Irish tax.
- Michael, as a new recruit, would not satisfy condition (iii) above and would be unable to claim the SARP relief.
- Split-year relief will also not apply to Michael, as his employment commences on the first day of the tax year.
(c) Taxable income 2012
Income tax Working € € Schedule D Case III Interest on government securities 10, Schedule E Salary 275, Bonus 20, Benefit in kind (car) 1 9, –––––––– Total taxable emoluments 304, Less: SARP relief 2 (74,325) 229, –––––––– Schedule F Dividends 3, –––––––– Taxable income for income tax 232, –––––––– PRSI and USC SARP does not relieve PRSI or USC. (€304,000 + €10,000 + €3,000) Taxable income for PRSI and USC 317, Workings: 1 Car: Benefit in kind (BIK) € Original market value 50, Applicable % (20,000 kms) 24% ––––––– Annualised BIK 12, ––––––– BIK based on 9 months (9/12) 9, Applicable percentage calcuation 20,000 x 12/9 = 26,667 (24% band) 2 Special assignee relief programme (SARP) relief € (Taxable emoluments – €75,000) x 30% (€304,000 – €75,000 x 9/12) x 30% 74, ––––––– Tutorial notes:
- Government securities: Where an individual is Irish resident, interest receivable on Irish government securities is subject to Irish income tax.
- Dividends from Irish companies are Irish source income, which will be subject to Irish income tax.
- USA investment income: As Hank does not plan to remit any of the USA investment income in 2012, it is therefore not subject to Irish tax.
(d) Health insurance premium As Hank will be subject to Irish income tax on any foreign income which is remitted to Ireland, it is not advisable for him to use the USA sourced income to pay his Irish health insurance premium, as this would constitute a remittance. Tax relief at the rate of 20% is granted at source on medical insurance premia.
(e) Gift to Kirsty (i) Tax payable without planning (1) The gift of the Irish shares represents a disposal for capital gains tax (CGT) purposes. Hank would be liable to CGT on any Irish gains. CGT will be payable at a rate of 30% on any increase in value of the share portfolio while in his ownership. However, it would be possible to offset the CGT as a credit against any capital acquisitions tax (CAT) payable by Kirsty on the gift, as both tax charges would arise on the same event. (2) Irish CAT will be payable by Kirsty on the gift of the Irish shares at the rate of 30% as the property in question is Irish. As Hank’s niece, Kirsty will be able to deduct the class 2 threshold of €33,500 from the value of the gift. (3) Stamp duty at a rate of 1% of the value of the shares will be payable by the recipient (Kirsty). (ii) Tax planning advice Note: Two possible options are outlined below. Option 1 Hank could gift Irish government securities (instead of Irish shares) to Kirsty in November 2014. CAT Certain Irish government securities are exempt from CAT when taken by a non-Irish domiciled, non-ordinarily resident individual (i. Kirsty). Where the disponer is either Irish domiciled or ordinarily Irish resident, the disponer must have owned the securities for 15 years prior to the gift or inheritance. However, there is no minimum holding period where the disponer is neither Irish domiciled nor ordinarily resident. As Hank would not be Irish domiciled or ordinarily resident in November 2014, a gift of government securities would not be subject to Irish CAT. Other taxes: - Gains on government securities are exempt from CGT. - The transfer of Irish government securities is exempt from stamp duty. Option 2 Hank could gift some of his US shares to Kirsty in November 2014. CAT The property would not be Irish and the recipient, Kirsty, would not be resident or ordinarily resident in Ireland. With regards to Hank, the disponer, the legislation provides that ‘Where a person is non-Irish domiciled, he/she will not be considered Irish resident or ordinarily resident for the purposes of CAT, unless he/she has been resident in the state for the five consecutive years of assessment preceding the date of the benefit and a resident or ordinarily resident on that particular date.’ In November 2014, Hank would satisfy the above criteria, so such a gift by him at that date would not be subject to CAT. Other taxes: - Hank would not be liable to Irish CGT on the disposal of the US shares as he would not be Irish domiciled and no remittance to Ireland would take place. - The transfer of the US shares to Kirsty would not be subject to Irish stamp duty provided the relevant share transfer document is executed outside Ireland.
3 Folsom Ltd
(a) (i) Consortium relief A loss consortium exists if at least 75% of the share capital of a company (the ‘consortium company’) is owned by five or fewer EU resident companies, and none of the companies owns more than 75% of the share capital of the consortium company. In this case, Folsom Ltd is a qualifying consortium company because 77% of the company is owned by three EU resident companies. The losses of Folsom Ltd may be surrendered to the members of the consortium in proportion to the member’s shareholding. The non-EU resident company, Jackson Ltd, will not be entitled to claim consortium loss relief. (ii) Computation of tax payable in 2012 Folsom Ltd Folsom Ltd must firstly use its Case I loss to eliminate any tax arising on its Case V income. The corporation tax (CT) payable by Folsom Ltd is as follows:
for the credit. The actual amount spent on the building qualifies (i. it is not incremental) and the corporation tax reduction is given in the year in which the expenditure is incurred. In relation to both the R&D credit and the R&D buildings credit, if the 25% credit exceeds the corporation tax, against which it can be offset, the excess may be carried back to an accounting period of equal length or carried forward for offset against the corporation tax payable in the following accounting period. Unused credits may be carried forward indefinitely. There is a refund mechanism for tax already paid, if the company wishes to make a claim. The time limit for making a claim is 12 months from the expiry of the accounting period in which the expenditure was incurred. (ii) Corporation tax payable 2012 € Case I profit 8,500, –––––––––– Corporation tax at 12·5% 1,062, Less R&D credit: Revenue costs ((€1,500,000 – (€500,000 – €100,000)) x 25% (275,000) Less R&D credit: Plant and machinery (€350,000 x 25%) (87,500) Less R&D credit: Building (€800,000 x 25%) (200,000) –––––––––– 500, Add: Corporation tax on Case III income (25% of €100,000) 25, –––––––––– Corporation tax payable 525, ––––––––––
4 ABC Ltd
(i) The exempt status of training for value added tax (VAT) purposes means that ABC Ltd does not charge VAT on the sales of its training services. It does not mean that the company is exempt from incurring VAT on its inputs (in this case the rent). Also, the company will not be entitled to reclaim the VAT incurred on the rent, because it relates to an exempt activity.
(ii) A s authorisation allows authorised persons to purchase goods and services, import goods and services and make intra-Community acquisitions at the zero rate of VAT. A qualifying person is an accountable person whose turnover from: o supplies of goods to either VAT registered persons in other EU member states or persons outside the EU; and/ or o certain contract work services in relation to movable goods where the goods are dispatched from Ireland to another country after the work is carried out amounts to 75% or more of his total turnover from the supply of goods and services. ABC Ltd should request XYZ plc to send it a copy of its up-to-date Certificate of Authorisation (called a ‘VAT13B’). On receipt of this documentation, the invoice can be reissued at the zero rate of VAT, and the VAT 13B authorisation should be quoted on the invoice.
(iii) Relevant contracts tax (RCT) only applies between principal contractors and sub-contractors in the construction, forestry and meat processing industries. ABC Ltd could not be considered to be a principal contractor, as it is not in any of the above sectors, so there is no necessity to deduct RCT from the payment to the plumber. The administration area of the building is presumably used by both the taxable (software sales) and exempt (training) activities. ABC Ltd will be entitled to reclaim the VAT inputs in the proportion that the turnover from the taxable activity bears to total turnover (i. 2/3rds). Therefore: VAT element of invoice: (€600 x 13·5/113·5) € 71 Allowable amount (2/3) € 47 Based on the scenario outlined, it appears that the plumber is attempting to evade tax by receiving a cash payment. ABC Ltd should make it clear to the plumber that they will make payment only on receipt of a valid invoice. If this plumber is not satisfied with this arrangement, the company should seek a different plumber. The method of payment (cash, cheque or bank transfer) is irrelevant from a tax viewpoint. However, if ABC Ltd were to make payment in cash, without receiving adequate documentation, it would not be entitled to either claim a VAT input credit for the work done, nor would it be entitled to claim the net repair as a deductible expense for corporation tax purposes. Furthermore, the company could be aiding tax evasion and payments such as these could be queried in the event of a revenue inspection with potential serious consequences for the company.
(iv) ABC Ltd is entitled to reclaim 20% of the VAT element of the car price. It is eligible for the reclaim because: o the scheme applies to category A, B and C cars; and o the car is being used more than 60% for business use (in relation to software sales, which is a taxable activity). Tutorial note: The non-business use is not relevant, once the 60% test has been satisfied.
The VAT element is calculated as follows: (23/123) x (Cost – VRT) (23/123) x (€30,000 – €4,000) = €4, ABC Ltd can reclaim a credit of 20% of this amount, i. €972.
(v) The place of supply of the legal services is Ireland and ABC Ltd is the taxable person. VAT at 23% of €5,000 (€1,150) should be accounted for on the reverse-charge basis. The VAT of €1,150 should be included in the company’s output (sales) VAT and it is also entitled to reclaim the total amount of input VAT, as the legal services relate exclusively to the taxable activity. This results in a neutral cash flow position for ABC Ltd.
(vi) ABC Ltd has a turnover from its taxable activity of less than €1 million and is therefore entitled to elect to account for VAT on a cash receipts basis. However, the company is required to apply to the Revenue for authorisation to do this. The liability to pay VAT will then arise by reference to the VAT period in which the cash is received and not by reference to the issuing of an invoice. After the changeover, VAT is not accounted for in respect of cash received for goods supplied while accounting on the invoice basis. If turnover from the taxable activity is expected to increase above €1 million in any 12-month period, the company would be obliged to switch back to the invoice basis. If ABC Ltd does not elect for VAT on a cash receipts basis, the following suggestions may improve cash flow: - Postpone issuing invoices at the end of a two-month VAT period until the start of the following month (subject to the legislative requirement of issuing an invoice no later than the fifteenth of the month following the supply of goods or services). - Apply for annual VAT registration with monthly direct debits, to avoid large variations in VAT payments.
(vii) Professional services withholding tax (PSWT) only applies to professional services and so will not apply to the software package supplied by ABC Ltd, which is a supply of goods.
5 Linda Harris
(a) Valuation of shareholding in Harris Ltd Linda holds 75% of the shares in the company and therefore no discount is applied in calculating the value of her shareholding. Value of the company (100%) €48,000, –––––––––––– Value of Linda’s shareholding (75%) €36,000, ––––––––––––
(b) Tax consequences of gift of shares to Ralph Option 1: Lifetime gift Capital gains tax (CGT) CGT will be payable by Linda on the disposal of shares to Ralph and the proceeds will be deemed to be the market value of the shares (as this is a transaction between connected parties). Retirement relief is not available to Linda, as it is a requirement of the relief that the claimant works in the business. The base cost will be €20 million (the value at the date Linda inherited the shares from her late husband). The resulting CGT amounts to €4,800,000. CGT payable by Linda € Proceeds 36,000, Less: Cost: 2008 (no indexation) (20,000,000) ––––––––––– Chargeable gain 16,000, ––––––––––– Taxable gain 16,000, ––––––––––– CGT at 30% 4,800,
Option 3: Discretionary trust settled during Linda’s lifetime and eventual appointment to Ralph
CGT and stamp duty on settlement As in Option 1, CGT of €4,800,000 will be payable on the lifetime transfer of the shareholding by Linda to the trust.
Stamp duty at 1% of €360,000 will also be payable on the transfer of shares into the trust.
Discretionary trust tax and taxes on appointment On Linda’s death, discretionary trust tax at the rate of 6% will be payable and a further 1% discretionary trust tax will be payable annually (but not in the same year as the initial 6% tax), until the relevant assets are appointed from the trust. If the trust assets are appointed within five years of the date of death, a refund of half the 6% discretionary trust tax will be receivable.
Furthermore, the trustees will be liable to CGT on any appreciation in the value of the shares while they are in the trust and Ralph will be subject to CAT on the value of any assets eventually appointed to him from the trust. There will be no stamp duty on the appointment of the shares to Ralph.
In summary, this is an expensive option; even if the shares are appointed to Ralph fairly soon after Linda’s death, the costs of which can be summarised as follows:
Summary of taxes payable
€ Payable CGT: Linda 4,800,000 Date of transfer of assets Stamp duty 360,000 Date of transfer of assets CAT: 6% Discretionary trust tax 2,160,000 Date of death: Linda CAT payable by Ralph 1,005,000 Date shares appointed to him –––––––––– 8,325, ––––––––––
CAT: 1% Discretionary trust tax €360,000 Annually until assets appointed Potential refund of discretionary trust tax €1,080,000 On appointment within five years
Potential CGT liabilities for the trust on appreciation in value.
Option 4: Discretionary trust settled on Linda’s death and eventual appointment to Ralph
CGT and stamp duty on settlement There are no CGT or stamp duty liabilities in this situation as the transfer is on a death.
Discretionary trust tax and taxes on appointment As in the case of Option 3:
the 6% discretionary trust tax (subject to a half refund if the assets are appointed within five years of Linda’s death) and the 1% annual tax will apply;
the trustees will be liable for CGT on the appreciation in the value of the shares while they are in the trust; and
Ralph will be liable to CAT (but not stamp duty) on the eventual appointment of assets to him.
Summary of taxes payable
€ Payable CAT: 6% Discretionary trust tax 2,160,000 Date of death: Linda CAT payable by Ralph 1,005,000 Date shares appointed to him –––––––––– 3,165, ––––––––––
CAT: 1% Discretionary trust tax €360,000 Annually until assets appointed Potential refund of discretionary trust tax €1,080,000 On appointment within five years
Potential CGT liabilities for the trust, on appreciation in value.
Evaluation of options The lifetime transfer of the shares by Linda, which is contemplated in options 1 and 3, would lead to a substantial CGT liability which should be avoided if possible. The use of a discretionary trust to defer the payment of CAT (options 3 and 4) provides no real benefit in this case, and results in a liability to substantial additional discretionary trust taxes, while the CAT will still remain payable by Ralph eventually (perhaps on a higher amount).
Recommendation Option 2 (Ralph inherits the shares from Linda) is recommended as the tax cost (€1,005,000) is substantially less than in the case of the other options, due to the availability of business property relief.
Professional Level – Options Module Paper P6 (IRL) Advanced Taxation (Irish) December 2013 Marking Scheme
This marking scheme is given as a guide to markers in the context of the suggested answer. Scope is given to markers to award marks for alternative approaches to a question, including relevant comment, and where well reasoned conclusions are provided. This is particularly the case for essay based questions where there will often be more than one definitive solution.
Available Maximum 1 (i) Options regarding sale of the Limerick business premises No VAT implications 0· Identification of capital loss in company 0· Option (i) Connected persons loss restriction and tax disadvantage 1· Stamp duty cost of purchase 1· Option (ii) Capital loss allowable 1· Recommendation: option (ii) 0· ––––– 5·0 4·
(ii) (1) Eligibility for relief(s) Sale of shares (distribution) Conditions for retirement relief that are met by Ken 2· Conclusion re not qualifying for retirement relief under the strict rules (see note) 0· Reason why Lucille does not qualify 0· Ken does not qualify for retirement relief re Cork business premises 1·0 4· ––––– Note: It is equally acceptable to refer to the revenue concession and determine that Ken is eligible for retirement relief. (2) Calculation of net after tax proceeds Tax at company level Gain on goodwill including calculation of goodwill 1· Limerick business premises: loss 0· Balancing charge 1· Liquidator’s distribution Assets 1· Liabilities 1· Distribution 0· Tax payable at shareholder level Ken Rogers: deemed disposal of shares (alternative solution allowing retirement relief is also acceptable) 1· Lucille Rogers: deemed disposal of shares 1· Ken Rogers: disposal of Cork business premises 1· Summary of net after tax proceeds 1· ––––– 10·5 9·
(iii) Severance package Identification of non-taxable elements (redundancy and pension) 1· Calculation of increased basic exemption 1· Calculation of SCSB 1· Conclusion – nil tax liability 0·5 4· –––––
(iv) (1) Potential tax underpayment Factors indicating that DJs are actually employees (0·5 each, maximum) 2· Not possible to exclude this by a term in the contract 0· Responsibility of company for payroll taxes 1· Demonstration of no loss of revenue 1· Company is at a minimum responsible for employer’s PRSI 1· ––––– 5·5 5·
Available Maximum 3 (a) (i) Identification and conditions of consortium relief 2· Application to Folsom Ltd 1·0 3· ––––– (ii) Folsom Ltd: corporation tax (CT) computation 1· Folsom Ltd: explanation of computation 1· Blues Ltd: CT computation 1· Blues Ltd: explanation of computation 0· Ring Ltd: explanation of inability to avail of consortium relief 1· Ring Ltd: treatment of loss 0· Fire Ltd: CT computation 1· Fire Ltd: explanation of limitation on consortium relief 1· Folsom Ltd: loss memorandum/calculation of unused loss 1· Explanation regarding remaining unused loss in Folsom Ltd 1· ––––– 9·5 9·
(b) (i) Explanation of R&D credit 1· Definition of qualifying expenditure 2· Explanation of buildings credit 1· Time limit for claim 0· Treatment of excess credit 1· ––––– 7·0 5· (ii) Digichoc Ltd: corporation tax computation 3· ––––– 20 –––––
4 (i) Clarification that the exempt status does not apply to inputs 1· Confirmation that the input VAT may not be reclaimed 1·0 2· –––––
(ii) Explanation of s authorisation 2· Advice to get a copy of the 13B certificate 1·0 3· –––––
(iii) Non-applicability of RCT as ABC is not a principal contractor 1· Calculation of allowable input VAT 2· Consequences of not receiving an invoice from the plumber 2·0 5· –––––
(iv) Eligibility for a VAT reclaim 1· Calculation of the rebate 2·0 3· –––––
(v) Applicability of reverse charge 1· Calculation of VAT and explanation of output and input VAT 1·0 2· –––––
(vi) Eligibility for cash receipts basis 1· Requirement to seek authorisation 0· Benefit of cash receipts basis 1· After the changeover, VAT not charged on amounts previously accounted for on the invoice basis 0· Requirement to change back if turnover exceeds €1 million 0· Alternative suggestions regarding improving cash flow 1· ––––– 4·5 3·
(vii) Non-applicability of PSWT 2· ––––– 20 –––––
Available Maximum 5 (a) Calculation of the value of Linda’s shares 1·
(b) (i) Option (1) CGT Commentary 1· Computation 1· CAT Commentary 2· Computation 1· Stamp duty 1· (ii) Option (2) No CGT or stamp duty on a death 1· CAT 1· (iii) Option (3) CGT payable on lifetime transfer to trust 1· Stamp duty payable on lifetime transfer 0· 6% discretionary trust tax 1· 1% tax annually 1· Appointment to Ralph: eventual CAT 1· Appointment to Ralph: no stamp duty 0· Trustees liable to CGT on appreciation in value 1· Summary of taxes payable 1· (iv) Option (4) No CGT or stamp duty on a death as for Option 2 0· Discretionary trust tax applies as in Option 3 1· CGT on trustees as for Option 3 0· CAT on appointment as for Option 3 0· Evaluation and recommendation 1· ––––– 21·0 19· ––––– ––––– 20 –––––
P6irl 2013 dec a - kkd
Module: Strategic Business Leadership (SBL)
University: Association of Chartered Certified Accountants
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