(c) (i) Explain how Messier Ltd can assist Galileo with the cost of relocating to the UK and/or provide him withinterest-free loan finance for this purpose without increasing his UK income tax liability; (3 marks)
题目
(c) (i) Explain how Messier Ltd can assist Galileo with the cost of relocating to the UK and/or provide him with
interest-free loan finance for this purpose without increasing his UK income tax liability; (3 marks)
相似考题
更多“(c) (i) Explain how Messier Ltd can assist Galileo with the cost of relocating to the UK and/or provide him withinterest-free loan finance for this purpose without increasing his UK income tax liability; (3 marks)”相关问题
-
第1题：
(d) Explain whether or not Dovedale Ltd, Hira Ltd and Atapo Inc can register as a group for the purposes of value
added tax. (3 marks)
正确答案：
(d) Dovedale Ltd and Hira Ltd can register as a group for the purposes of value added tax (VAT) because Dovedale Ltd controls
Hira Ltd and both companies are established in the UK in that their head offices are in the UK.
Dovedale Ltd will also control Atapo Inc. However, Atapo Inc cannot be part of a group registration unless it is established
in the UK or has a fixed establishment in the UK. It will be regarded as established in the UK if it is centrally managed and
controlled in the UK or if its head office is in the UK. A fixed establishment is a place where the company has staff and
equipment and where its business is carried on. -
第2题：
(b) Compute Gloria’s total income tax and national insurance liability for 2006/07. (7 marks)
正确答案：
-
第3题：
(b) (i) Compute the corporation tax liability of Speak Write Ltd for its first trading period on the assumption
that the IR 35 legislation applies to all of its income. (2 marks)
正确答案：
-
第4题：
(b) Peter, one of Linden Limited’s non-executive directors, having lived and worked in the UK for most of his adult
life, sold his home near London on 22 March 2006 and, together with his wife (a French citizen), moved to live
in a villa which she owns in the south of France. Peter is now demanding that the tax deducted from his director’s
fees, for the board meetings held on 18 April and 16 May 2006, be refunded, on the grounds that, as he is no
longer resident in the UK, he is no longer liable to UK income tax. All of the company’s board meetings are held
at its offices in Cambridge.
Despite Peter’s assurance that none of the other companies of which he is a director has disputed his change of
tax status, Damian is uncertain whether he should make the refunds requested. However, as Peter is a friend of
the company’s founder, Linden Limited’s managing director is urging him to do so, stating that if the tax does
have to be paid, then Linden Limited could always bear the cost.
Required:
Advise Damian whether Peter is correct in his assertion regarding his tax position and in the case that there
is a UK tax liability the implications of the managing director’s suggestion. You are not required to consider
national insurance (NIC) issues. (4 marks)
正确答案：
(b) Peter will have been resident and ordinarily resident in the UK. When such individuals leave the UK for a purpose other than
to take up full time employment abroad, they normally continue to still be so regarded unless their absence spans a complete
tax year. But, where someone intends to live permanently abroad or to do so for a period of at least three tax years, they may
be treated as non-resident and non-ordinarily resident from the day after the date of their departure, if they can provide
evidence to HMRC of that intention. Selling a residence in the UK and setting up home abroad will normally constitute such
evidence. However to retain non-resident status the intention must actually be fulfilled, and visits to the UK must not exceed
182 days in any tax year or average more than 90 days per year over a period of four tax years. Given that Peter would appear
to have several company directorships in the UK, it is possible that he might fail to satisfy the 90 day average ‘substantial
visits’ rule.
Even if Peter is classed as non-resident, any remuneration earned in the UK will still be liable to UK income tax, and subject
to PAYE, unless it is for duties incidental to an overseas employment, which is unlikely to be the case for fees paid to a nonexecutive
director for attending board meetings. Thus, income tax should still be deducted from the fees under PAYE. Where
PAYE should have been deducted from a director’s emoluments and it has not been, but the tax is nevertheless accounted
for by the company to HMRC, then to the extent that the tax is not reimbursed by the director, he will be treated as receiving
a benefit equivalent to the amount of tax. -
第5题：
(ii) Advise Andrew of the tax implications arising from the disposal of the 7% Government Stock, clearly
identifying the tax year in which any liability will arise and how it will be paid. (3 marks)
正确答案：
(ii) Government stock is an exempt asset for the purposes of capital gains tax, however, as Andrew’s holding has a nominal
value in excess of ￡5,000, a charge to income tax will arise under the accrued income scheme. This charge to income
tax will arise in 2005/06, being the tax year in which the next interest payment following disposal falls due (20 April
2005) and it will relate to the income accrued for the period 21 October 2004 to 14 March 2005 of ￡279 (145/182
x ￡350). As interest on Government Stock is paid gross (unless the holder applies to receive it net), the tax due of ￡112
(￡279 x 40%) will be collected via the self-assessment system and as the interest was an ongoing source of income
will be included within Andrew’s half yearly payments on account payable on 31 January and 31 July 2006. -
第6题：
(ii) The UK value added tax (VAT) implications for Razor Ltd of selling tools to and purchasing tools from
Cutlass Inc; (2 marks)
正确答案：
(ii) Value added tax (VAT)
Goods exported are zero-rated. Razor Ltd must retain appropriate documentary evidence that the export has taken place.
Razor Ltd must account for VAT on the value of the goods purchased from Cutlass Inc at the time the goods are brought
into the UK. The VAT payable should be included as deductible input tax on the company’s VAT return. -
第7题：
(b) Explain the corporation tax and value added tax (VAT) implications of the following aspects of the proposed
restructuring of the Rapier Ltd group.
(i) The immediate tax implications of the restructuring. (6 marks)
正确答案：
(b) The tax implications of the proposed restructuring of the Rapier Ltd group
(i) Immediate implications
Corporation tax
Rapier Ltd and its subsidiaries are in a capital gains group as Rapier Ltd owns at least 75% of the ordinary share capital
of each of the subsidiary companies. Any non-exempt items of plant and machinery owned by the subsidiaries will
therefore be transferred to Rapier Ltd at no gain, no loss.
No taxable credit or allowable debit will arise on the transfer of the subsidiaries’ goodwill to Rapier Ltd because the
companies are in a capital gains group.
The trading losses brought forward in Dirk Ltd will be transferred with the trade to Rapier Ltd as the effective ownership
of the three trades will not change (Rapier Ltd owns the subsidiaries which own the trades and, following the
restructuring, will own the three trades directly). The losses will be restricted to being offset against the future trading
profits of the Dirk trade only.
There will be no balancing adjustments in respect of the plant and machinery transferred to Rapier Ltd. Writing down
allowances will be claimed by the subsidiaries in respect of the year ending 30 June 2007 and by Rapier Ltd in respect
of future periods.
Value added tax (VAT)
No VAT should be charged on the sales of the businesses to Rapier Ltd as they are outside the scope of VAT. This is
because the trades are to be transferred as going concerns to a VAT registered person with no significant break in trading.
Switch Ltd must notify HM Revenue and Customs by 30 July 2007 that it has ceased to make taxable supplies. -
第8题：
4 Coral is the owner and managing director of Reef Ltd. She is considering the manner in which she will make her first
pension contributions. In November 2007 she inherited her mother’s house in the country of Kalania.
The following information has been extracted from client files and from telephone conversations with Coral.
Coral:
– 1972 – Born in the country of Kalania. Her father, who died in 2002, was domiciled in Kalania.
– 1999 – Moved to the UK and has lived and worked here since then.
– 2001 – Subscribed for 100% of the ordinary share capital of Reef Ltd.
– Intends to sell Reef Ltd and return to live in the country of Kalania in 2012.
– No income apart from that received from Reef Ltd.
Reef Ltd:
– A UK resident company with annual profits chargeable to corporation tax of approximately ￡70,000.
– Four employees including Coral.
– Provides scuba diving lessons to members of the public.
Payments from Reef Ltd to Coral in 2007/08:
– Director’s fees of ￡460 per month.
– Dividends paid of ￡14,250 in June 2007 and ￡14,250 in September 2007.
Pension contributions:
– Coral has not so far made any pension contributions in the tax year 2007/08 but wishes to make gross pension
contributions of ￡9,000.
– The contributions are to be made by Reef Ltd or Coral or a combination of the two in such a way as to minimise
the total after tax cost.
– Any contributions made by Coral will be funded by an additional dividend from Reef Ltd.
House in the country of Kalania:
– Beachfront property with potential rental income of ￡550 per month after deduction of allowable expenditure.
– Coral will use it for holidays for two months each year.
The tax system in the country of Kalania:
– No capital gains tax or inheritance tax.
– Income tax at 8% on income arising in the country of Kalania.
– No double tax treaty with the UK.
Required:
(a) With the objective of minimising the total after tax cost, advise Coral as to whether the gross pension
contributions of ￡9,000 should be made:
– wholly by Reef Ltd; or
– by Coral to the extent that they are tax allowable with the balance made by Reef Ltd.
Your answer should include supporting calculations where necessary. (9 marks)
正确答案：
-
第9题：
(ii) Explain how the inclusion of rental income in Coral’s UK income tax computation could affect the
income tax due on her dividend income. (2 marks)
You are not required to prepare calculations for part (b) of this question.
Note: you should assume that the tax rates and allowances for the tax year 2006/07 and for the financial year to
31 March 2007 will continue to apply for the foreseeable future.
正确答案：
(ii) The effect of taxable rental income on the tax due on Coral’s dividend income
Remitting rental income to the UK may cause some of Coral’s dividend income currently falling within the basic rate
band to fall within the higher rate band. The effect of this would be to increase the tax on the gross dividend income
from 0% (10% less the 10% tax credit) to 221/2% (321/2% less 10%).
Tutorial note
It would be equally acceptable to state that the effective rate of tax on the dividend income would increase from 0%
to 25%. -
第10题：
(b) Provide the directors of Acrux Ltd with a detailed explanation of the maximum rate of tax that will be suffered
on both the distributed and non-distributed profits of the non-UK resident investee companies where:
(1) there is a double tax treaty between the UK and the country in which the individual companies are
resident; and
(2) there is no such double tax treaty.
Note: you are not required to explain the position of the overseas resident branches. (6 marks)
正确答案：
(b) Rate of tax on profits of non-UK resident investee companies
Undistributed profits
The companies will be subject to tax in the countries in which they are resident; this is because of their residency status or
because they have a permanent establishment in that country. Undistributed profits will not be taxed in the UK.
The rate of tax on undistributed profits will therefore be the rate of tax in the country of residency of the respective companies.
Distributed profits with double tax treaty
The dividends received by Acrux Ltd from each of the overseas companies will be grossed up in respect of underlying tax (the
overseas corporation tax paid on the distributed profits) because Acrux Ltd will own at least 10% of the overseas companies.
The gross amount will then be included in Acrux Ltd’s profits chargeable to corporation tax.
The treaty will provide double tax relief in the UK for the overseas tax suffered in respect of each dividend up to a maximum
of the UK tax on the grossed up overseas dividend. As a result of the double tax relief, the overall rate of tax suffered will be
the higher of the UK rate paid by Acrux Ltd and the overseas tax rate borne by the overseas company.
Where the rate of overseas tax in respect of a particular dividend exceeds the rate of corporation tax in the UK, excess foreign
tax will arise. This can be relieved, via onshore pooling, against the UK tax due on those dividends where the rate of tax in
the UK exceeds the rate overseas. This will reduce the overall rate of tax suffered on the total overseas profits of the overseas
companies as a whole.
Distributed profits with no double tax treaty
Where there is no double tax treaty, unilateral double tax relief will be available in the UK. This relief will operate in the same
way as double tax relief under a double tax treaty such that the overall rate of tax on each dividend will be the higher of the
UK rate paid by Acrux Ltd and the overseas rate borne by the overseas company. Relief via onshore pooling will also be
available. -
第11题：
(b) Prepare a reasoned explanation of how any capital gains tax arising in the UK on the sale of the paintings
can be minimised. (2 marks)
正确答案：
(b) Minimising capital gains tax on the sale of the paintings
Galileo will become resident and ordinarily resident from the date he arrives in the UK as he intends to stay for more than
three years. Prior to that date he will be neither resident nor ordinarily resident such that he will not be subject to UK capital
gains tax.
Galileo should sell the paintings before he leaves Astronomeria; this will avoid UK capital gains tax completely.
Tutorial note
The gains would be taxable on the remittance basis if the paintings were sold after Galileo’s arrival in the UK. However, this
would not help Galileo to minimise the capital gains tax due as he needs to bring the sales proceeds into the UK in order
to purchase a house. -
第12题：
2 Assume that today’s date is 1 July 2005.
Jan is aged 45 and single. He is of Danish domicile but has been working in the United Kingdom since 1 May 2004
and intends to remain in the UK for the medium to long term. Although Jan worked briefly in the UK in 1986, he
has forgotten how UK taxation works and needs some assistance before preparing his UK income tax return.
Jan’s salary from 1 May 2004 was ￡74,760 per annum. Jan also has a company car – a Jaguar XJ8 with a list price
of ￡42,550 including extras, and CO2 emissions of 242g/km. The car was available to him from 1 July 2004. Free
petrol is provided by the company. Jan has other taxable benefits amounting to ￡3,965.
Jan’s other 2004/05 income comprises:
￡
Dividend income from UK companies (cash received) 3,240
Interest received on an ISA account 230
Interest received on a UK bank account 740
Interest remitted from an offshore account (net of 15% withholding tax) 5,100
Income remitted from a villa in Portugal (net of 45% withholding tax) 4,598
The total interest arising on the offshore account was ￡9,000 (gross). In addition, Jan has not remitted other
Portuguese rental income arising in the year, totalling a further ￡1,500 (gross).
Jan informs you that his employer is thinking of providing him with rented accommodation while he looks for a house
to buy. The accommodation would be a two bedroom flat, valued at ￡155,000 with an annual value of ￡6,000. It
would be made available from 6 August 2005. The company will pay the rent of ￡600 per month for the first six
months. All other bills will be paid by Jan.
Jan also informs you that he has 25,000 ordinary shares in Gilet Ltd (‘Gilet’), an unquoted UK trading company. He
has held these shares since August 1986 when he bought 2,500 shares at ￡4.07 per share. In January 1994, a
bonus issue gave each shareholder nine shares for each ordinary share held. In the last week all Gilet’s shareholders
have received an offer from Jumper plc (‘Jumper’) who wishes to acquire the shares. Jumper has offered the following:
– 3 shares in Jumper (currently trading at ￡3.55 per share) for every 5 shares in Gilet, and
– 25p cash per share
Required:
(a) Calculate Jan’s 2004/05 income tax (IT) payable. (11 marks)
正确答案：
-
第13题：
(c) Outline the ways in which Arthur and Cindy can reduce their income tax liability by investing in unquoted
shares and recommend, with reasons, which form. of investment best suits their circumstances. You are not
required to discuss the qualifying conditions applicable to the investment vehicle recommended. (5 marks)
You should assume that the income tax rates and allowances for the tax year 2005/06 apply throughout this
question
正确答案：
(c) Reduction of income tax liability by investing in unquoted shares
The two forms of investment
Income tax relief is available for investments in venture capital trusts (VCTs) and enterprise investment scheme (EIS) shares.
A VCT is a quoted company that invests in shares in a number of unquoted trading companies. EIS shares are shares in
qualifying unquoted trading companies.
Recommendation
The most suitable investment for Arthur and Cindy is a VCT for the following reasons.
– An investment in a VCT is likely to be less risky than investing directly in EIS companies as the risk will be spread over
a greater number of companies.
– The tax deduction is 40% of the amount invested as opposed to 20% for EIS shares.
– Dividends from a VCT are not taxable whereas dividends on EIS shares are taxed in the normal way. -
第14题：
(d) Explain how Gloria would be taxed in the UK on the dividends paid by Bubble Inc and the capital gains tax
and inheritance tax implications of a future disposal of the shares. Clearly state, giving reasons, whether or
not the payment made to Eric is allowable for capital gains tax purposes. (9 marks)
You should assume that the rates and allowances for the tax year 2005/06 apply throughout this question.
正确答案：
(d) UK tax implications of shares in Bubble Inc
Income tax
Gloria is UK resident and is therefore subject to income tax on her worldwide income. However, because she is non-UK
domiciled, she will only be taxed on the foreign dividends she brings into the UK.
Dividends brought into the UK will be grossed up for any tax paid in Oceania. The gross amount is taxed at 10% if it falls
into the starting or basic rate band and at 321/2% if it falls into the higher rate band. The tax suffered in Oceania is available
for offset against the UK tax liability. The offset is restricted to a maximum of the UK tax on the dividend income.
Capital gains tax
Individuals are subject to capital gains tax on worldwide assets if they are resident or ordinarily resident in the UK. However,
because Gloria is non-UK domiciled and the shares are situated abroad, the gain is only taxable to the extent that the sales
proceeds are brought into the UK. Any tax suffered in Oceania in respect of the gain is available for offset against the UK
capital gains tax liability arising on the shares.
Any loss arising on the disposal of the shares would not be available for relief in the UK.
In computing a capital gain or allowable loss, a deduction is available for the incidental costs of acquisition. However, to be
allowable, such costs must be incurred wholly and exclusively for the purposes of acquiring the asset. The fee paid to Eric
related to general investment advice and not to the acquisition of the shares and therefore, would not be deductible in
computing the gain.
Taper relief will be at non-business asset rates as Bubble Inc is an investment company.
Inheritance tax
Assets situated abroad owned by non-UK domiciled individuals are excluded property for the purposes of inheritance tax.
However, Gloria will be deemed to be UK domiciled (for the purposes of inheritance tax only) if she has been resident in the
UK for 17 out of the 20 tax years ending with the year in which the disposal occurs.
Gloria has been running a business in the UK since June 1992 and would therefore, appear to have been resident for at least
15 tax years (1992/93 to 2006/07 inclusive).
If Gloria is deemed to be UK domiciled such that the shares in Bubble Inc are not excluded property, business property relief
will not be available because Bubble Inc is an investment company. -
第15题：
(ii) Assuming the relief in (i) is available, advise Sharon on the maximum amount of cash she could receive
on incorporation, without triggering a capital gains tax (CGT) liability. (3 marks)
正确答案：
(ii) As Sharon is entitled to the full rate of business asset taper relief, any gain will be reduced by 75%. The position is
maximised where the chargeable gain equals Sharon’s unused capital gains tax annual exemption of ￡8,500. Thus,
before taper relief, the gain she requires is ￡34,000 (1/0·25 x ￡8,500).
The amount to be held over is therefore ￡46,000 (80,000 – 34,000). Where part of the consideration is in the form
of cash, the gain eligible for incorporation relief is calculated using the formula:
Gain deferred = Gain x value of shares issued/total consideration
The formula is manipulated on the following basis:
￡46,000 = ￡80,000 x (shares/120,000)
Shares/120,000 = ￡46,000/80,000
Shares = ￡46,000 x 120,000/80,000
i.e. ￡69,000.
As the total consideration is ￡120,000, this means that Sharon can take ￡51,000 (￡120,000 – ￡69,000) in cash
without any CGT consequences. -
第16题：
(iii) Explain the potential corporation tax (CT) implications of Tay Limited transferring work to Trent Limited,
and suggest how these can be minimised or eliminated. (3 marks)
正确答案：
(iii) Trading losses may not be carried forward where, within a period of three years there is both a change in the ownership
of a company and a major change in the nature or conduct of its trade. The transfer of work from Tay Limited to Trent
Limited is likely to constitute a major change in the nature or conduct of the latter’s trade. As a consequence, any tax
losses at the date of acquisition will be forfeited. Assuming losses were incurred uniformly in 2005, the tax losses at the
date of acquisition were ￡380,000 (300,000 + 2/3 x 120,000)). This is worth ￡114,000 assuming a corporation tax
rate of 30%.
Thus, Tay Limited should not consider transferring any trade to Trent Limited until after the third anniversary of the date
of the change of ownership i.e. not before 1 September 2008. As the trades are similar, there should be little problem
in transferring work from that date onwards. -
第17题：
(ii) Analyse the effect of delaying the sale of the business of the Stiletto Partnership to Razor Ltd until
30 April 2007 on Clint’s income tax and national insurance position.
You are not required to prepare detailed calculations of his income tax or national insurance liabilities.
(4 marks)
正确答案：(ii) The implications of delaying the sale of the business
The implications of delaying the sale of the business until 30 April would have been as follows:
– Clint would have received an additional two months of profits amounting to ￡6,920 (￡20,760 x 1/3).
– Clint’s trading income in 2006/07 would have been reduced by ￡13,015 (￡43,723 – ￡30,708), much of which
would have been subject to income tax at 40%. His additional trading income in 2007/08 of ￡19,935 would all
have been taxed at 10% and 22%.
– Clint is entitled to the personal age allowance of ￡7,280 in both years. However, it is abated by ￡1 for every ￡2
by which his total income exceeds ￡20,100. Once Clint’s total income exceeds ￡24,590 (￡20,100 + ((￡7,280
– ￡5,035) x 2)), his personal allowance will be reduced to the standard amount of ￡5,035. Accordingly, the
increased personal allowance would not be available in 2006/07 regardless of the year in which the business was
sold. It is available in 2007/08 (although part of it is wasted) but would not have been if the sale of the business
had been delayed.
– Clint’s class 4 national insurance contributions in 2006/07 would have been reduced due to the fall in the level
of his trading income. However, much of the saving would be at 1% only. Clint is not liable to class 4 national
insurance contributions in 2007/08 as he is 65 at the start of the year.
– Changing the date on which the business was sold would have had no effect on Clint’s class 2 liability as he is
not required to make class 2 contributions once he is 65 years old.
-
第18题：
(iii) The extent to which Amy will be subject to income tax in the UK on her earnings in respect of duties
performed for Cutlass Inc and the travel costs paid for by that company. (5 marks)
Appropriateness of format and presentation of the report and the effectiveness with which its advice is
communicated. (2 marks)
Note:
You should assume that the income tax rates and allowances for the tax year 2006/07 and the corporation tax
rates and allowances for the financial year 2006 apply throughout this questio
正确答案：
(iii) Amy’s UK income tax position
Amy will remain UK resident and ordinarily resident as she is not leaving the UK permanently or for a complete tax year
under a full time contract of employment. Accordingly, she will continue to be subject to UK tax on her worldwide income
including her earnings in respect of the duties she performs for Cutlass Inc. The earnings from these duties will also be
taxable in Sharpenia as the income arises in that country.
The double tax treaty between the UK and Sharpenia will either exempt the employment income in one of the two
countries or give double tax relief for the tax paid in Sharpenia. The double tax relief will be the lower of the UK tax and
the Sharpenian tax on the income from Cutlass Inc.
Amy will not be subject to UK income tax on the expenses borne by Cutlass Inc in respect of her flights to and from
Sharpenia provided her journeys are wholly and exclusively for the purposes of performing her duties in Sharpenia.
The amounts paid by Cutlass Inc in respect of Amy’s family travelling to Sharpenia will be subject to UK income tax as
Amy will not be absent from the UK for a continuous period of at least 60 days. -
第19题：
(ii) A proposal which will increase the after tax proceeds from the sale of the Snapper plc loan stock and a
reasoned recommendation of a more appropriate form. of external finance. (3 marks)
正确答案：
(ii) Proposal to increase the after tax proceeds from the sale of the loan stock
AS should delay the sale of the loan stock until after 5 April 2008. The gain made at the time of the takeover would
then crystallise in 2008/09 and would be covered by the annual exemption for that year. The net proceeds would be
increased by the capital gains tax saved of ￡3,446 (￡8,616 x 40%).
More appropriate forms of external finance
A bank overdraft is not the most appropriate form. of long term business finance. This is because the bank can demand
repayment of the overdraft at any time and the rates of interest charged are fairly high.
AS should seek long term finance for his long term business needs, for example a bank loan secured on the theatre, and
use the bank overdraft to finance the working capital required on a day-to-day basis. -
第20题：
(b) (i) Explain, by reference to Coral’s residence, ordinary residence and domicile position, how the rental
income arising in respect of the property in the country of Kalania will be taxed in the UK in the tax year
2007/08. State the strategy that Coral should adopt in order to minimise the total income tax suffered
on the rental income. (7 marks)
正确答案：
(b) (i) UK tax on the rental income
Coral is UK resident in 2007/08 because she is present in the UK for more than 182 days. Accordingly, she will be
subject to UK income tax on her Kalanian rental income.
Coral is ordinarily resident in the UK in 2007/08 as she is habitually resident in the UK.
Coral will have acquired a domicile of origin in Kalania from her father. She has not acquired a domicile of choice in the
UK as she has not severed her ties with Kalania and does not intend to make her permanent home in the UK.
Accordingly, the rental income will be taxed in the UK on the remittance basis.
Any rental income remitted to the UK will fall into the basic rate band and will be subject to income tax at 22% on the
gross amount (before deduction of Kalanian tax). Unilateral double tax relief will be available in respect of the 8% tax
suffered in Kalania such that the effective rate of tax suffered by Coral in the UK on the grossed up amount of income
remitted will be 14%.
In order to minimise the total income tax suffered on the rental income Coral should ensure that it is not brought into or
used in the UK such that it will not be subject to income tax in the UK.
Coral should retain evidence, for example bank statements, to show that the rental income has not been removed from
Kalania. Coral can use the money whilst she is on holiday in Kalania with no UK tax implications. -
第21题：
3 Spica, one of the director shareholders of Acrux Ltd, has been in dispute with the other shareholders over plans to
expand the company’s activities overseas. In order to resolve the position it has been agreed that Spica will sell her
shares back to the company. Once the purchase of her shares has taken place, the company intends to establish a
number of branches overseas and acquire a shareholding in a number of companies that are resident and trade in
overseas countries.
The following information has been obtained from client files and meetings with the parties involved.
Acrux Ltd:
– An unquoted UK resident company.
– Share capital consists of 50,000 ordinary shares issued at ￡1·90 per share in July 2000.
– None of the other shareholders has any connection with Spica.
The purchase of own shares:
– The company will purchase all of Spica’s shares for ￡8 per share.
– The transaction will take place by the end of 2008.
Spica:
– Purchased 8,000 shares in Acrux Ltd for ￡2 per share on 30 September 2003.
– Has no income in the tax year 2008/09.
– Has chargeable capital gains in the tax year 2008/09 of ￡3,800.
– Has houses in the UK and the country of Solaris and divides her time between them.
Investment in non-UK resident companies:
– Acrux Ltd will acquire between 15% and 20% of each of the non-UK resident companies.
– The companies will not be controlled foreign companies as the rates of tax in the overseas countries will be
between 23% and 42%.
– There may or may not be a double tax treaty between the UK and the overseas countries in which the companies
are resident. Where there is a treaty, it will be based on the OECD model treaty.
– None of the countries concerned levy withholding tax on dividends paid to UK companies.
– The directors of Acrux Ltd are concerned that the rate of tax suffered on the profits of the overseas companies
will be very high as they will be taxed in both the overseas country and in the UK.
Required:
(a) (i) Prepare detailed calculations to determine the most beneficial tax treatment of the payment Spica will
receive for her shares; (7 marks)
正确答案：
-
第22题：
(ii) Explain why Galileo is able to pay the inheritance tax due in instalments, state when the instalments are
due and identify any further issues relevant to Galileo relating to the payments. (3 marks)
正确答案：
(ii) Payment by instalments
The inheritance tax can be paid by instalments because Messier Ltd is an unquoted company controlled by Kepler at
the time of the gift and is still unquoted at the time of his death.
The tax is due in ten equal annual instalments starting on 30 November 2008.
Interest will be charged on any instalments paid late; otherwise the instalments will be interest free because Messier is
a trading company that does not deal in property or financial assets.
All of the outstanding inheritance tax will become payable if Galileo sells the shares in Messier Ltd.
Tutorial note
Candidates were also given credit for stating that payment by instalments is available because the shares represent at
least 10% of the company’s share capital and are valued at ￡20,000 or more. -
第23题：
(ii) State, with reasons, whether Messier Ltd can provide Galileo with accommodation in the UK without
giving rise to a UK income tax liability. (2 marks)
正确答案：
(ii) Tax-free accommodation
It is not possible for Messier Ltd to provide Galileo with tax-free accommodation. The provision of accommodation by an
employer to an employee will give rise to a taxable benefit unless it is:
– necessary for the proper performance of the employee’s duties, e.g. a caretaker; or
– for the better performance of the employee’s duties and customary, e.g. a hotel manager; or
– part of arrangements arising out of threats to the employee’s security, e.g. a government minister.
As a manager of Messier Ltd Galileo is unable to satisfy any of the above conditions.