BPP QB

Question 1

Computing Corporation Tax:

Cost of replacing part of a wall knocked down by a lorry

Answer 1

Allowable because it was only part

Question 2

Computing Corporation Tax:

Cost of initial repairs to an office building. Building was not useable w/o repairs

Answer 2

Not allowable (capex) because building was not useable when purchased so we assume PP reflected this

Question 3

BPP QB 4.4

Sorting income types into correct CAPs

The options were:
Time apportioned
Period in which arises
Separate computation

Answer 3

1. I think ‘time-apportioned’ is similar to accruals - ie. you are ignoring when it hits the bank and just spread out over the period.

So Trading Income & Property income.

2. I think ‘Period in which arises’ is like ‘cash basis’ ie. it gets included when it arises (hits the bank)

So Interest income and Chargeable gain (ie when you dispose of an item)

3. Separate computation.
   This only applied to Capital allowances

Question 4

If a company receives a notice to file its tax return, what date must it be filed by? (BPP 10.3)

Answer 4

It SEEMS to be (from the 2 BPP Qs)

The LATER of:

• 12 months from the Year End (ie normal due date)
• 3 months from the date of the notice (example is notice 28/11 due 28/02 so its not 100% clear if its EOM)

Question 5

An individual who becomes chargeable to income tax in a TY must notify HMRC by when ?

Answer 5

05/10 after the end of the TY

NB: It’s 6 months from end of TY which is the 5th NOT the 6th (start of next TY)

Question 6

How long must COMPANIES keep records?

Is it from Period or Tax year?

Answer 6

6 years from End of Accounting period. (TYs are not very relevant to companies)

eg. EOAP is 31/03/21 must keep until 31/03/27

Question 7

Indicators for IR35

Answer 7

One employer

Use Employers Equip

Cant hire sub

Question 8

If caught undeer IR35 how does this affect tax

Answer 8

1. Will be taxed on a deemed employment charge.

This will be subject to income tax and NICS

Dividends are not subject to NICS

Fewer expenses deductible from deemed employment than a company’s trading profits

Question 9

R & D

Turnover (in ref)
Balance sheet (assets) (in Ref)

Tax credit %

Answer 9

Company with <500 employees with EITHER
Annual Turnover < EUR 100 Million.
OR
Balance sheet < EUR 86 Million.

Get 14.5% credits for the SMALLER of:
The trading loss
The R&D 230% amount

Question 10

For a company chargeable gain calc where chattel marginal relief applies..

when calculating the gain using CMR do you include incidental costs? Indexing?

Answer 10

No

Calculate the gain using indexation.

For CMR calc take total proceeds (do not deduct selling costs etc) minus 6000 and do the 5/3 on that (no indexing here)

Choose the smaller gain

Question 11

Big Capital allowances calc:

How do you handle a disposals:

1. Sold for less than bought for?
2. Sold for more than cost?

Answer 11

1. Disposal amount goes into calc.

2. Original cost goes in NOT disposal amount.