A professional accountant is asked by her father, a partner in the firm employing her, to overstate the allowable expenses in a client's tax-adjusted accounts. He is offering to recommend she receive a bonus payment if she does this.
Which two threats to
A and C - The family connection leads to a familiarity threat. The bonus offered constitutes a self-interest threat.
A professional accountant has been asked to act for a taxpayer who is negotiating a redundancy settlement with his employer. The employer concerned is a company which is one of the professional accountant's existing clients.
Which of the following stateme
D - There is an actual conflict here between the company and the employee. This should be disclosed to both parties.
Which of the following actions by a taxpayer would not constitute tax evasion?
A Obtaining tax-free interest by investing in an ISA
B Claiming capital allowances on a fictitious item of plant
C Choosing not to declare rental income received
D Failing to n
A - This is a legitimate way to reduce tax, whereas the others all constitute tax evasion and are illegal.
Which two of the following are direct taxes?
A Excise duty
B Capital gains tax
C Value added tax
D Corporation tax
B and D - capital gains tax and corporation tax. The others are indirect taxes.
Governments change their tax policy to achieve 'social justice'.
Which of the following has not been an important principle of social justice in modern politics?
A Progressive principle
B Ability to pay principle
C Neutrality principle
D Regressive princi
C - the neutrality principle (taxes should not distort choice).
What are the dates of the Financial Year 2017?
A 1 April 2016 to 31 March 2017
B 1 January 2017 to 31 December 2017
C 1 April 2017 to 31 March 2018
D 6 April 2017 to 5 April 2018
C - 1 April 2017 - 31 March 2018
Which two of the following are functions carried out by HMRC?
A Collect and administer direct taxes
B Pay and administer jobseekers allowance
C Enforce the minimum wage rules
D Pay and administer the state pension
A Collect and administer direct taxes
C Enforce minimum wage rules
Which two of the following taxes may be payable by a company?
A National insurance at 2% on its taxable trading profits
B Corporation tax at 19 % on its taxable trading profits
C Capital gains tax at 10% on its chargeable gains
D Value added tax at 20% on
B - Corporation tax
D - VAT
Which of the following is chargeable to income tax?
A Interest from a NS&I investment account
B Dividends received from an Individual Savings Account
C �10 Lottery winnings
D Scholarship awarded by a university
A Interest from a NS&I investment account
Which two of the following sources of income are non-savings income?
A Interest from a building society
B Property income
C Dividend from a UK company
D Trading profits
B Property income
D Trading profits
At what rates is tax charged on savings income?
A 0%, 7.5%, 32.5%, 38.1%
B 0%, 20%, 40%, 45%
C 0%, 20%, 32.5%
D 20%, 32.5%, 40%, 45%
B 0%, 20%, 40%, 45%
How is higher rate tax relief given for a Gift Aid donation?
A Deducted from net income
B Treated as paid net of higher rate tax
C Basic rate band extended by grossed up donation D No higher rate tax relief given
C Basic rate band extended by grossed up donation
A taxpayer has net income of �42,800 in 2017/18. What savings income nil rate band is he entitled to?
A �11,500
B �5,000
C �1,000
D �500
C �1,000
Perry received income from various sources during 2018/19. Which two of the following are exempt from income tax?
A �100 of National Savings & Investments Direct Saver Account interest
B �80 of National Savings Certificate interest
C �40 of interest recei
B - �80 of National Savings Certificate Interest
E - �40 of dividends on Y pls shares held in a stocks and shares ISA
Which two of the following items are treated as 'non-taxable income' for income tax purposes?
A Income tax repayment interest
B Interest paid on a loan between two friends
C National Lottery winnings
D Pension income
E Tips given to staff by customers
A - Income tax repayment interest
C - National lottery winnings
In addition to his wages, Massimo has received income from various sources during 2018/19. Which two of the following are exempt from income tax?
A Pension income
B Interest received on a loan to his son
C Dividends from shares held in an ISA
D Gratuities
C - Dividends from shares held in an ISA
E - Premium bond winnings
Identify the effect of the following items on the relevant tax liabilities.
Mark has employment income in 2017/18 of �160,000, and no other sources of income. On 1 February 2018 Mark paid �2,100 to a charity under the Gift Aid provisions.
In 2017/18 the G
B Decrease Mark's income tax liability
Sandra works for Julian (a sole trader) as a part-time salesperson at a salary of �6,000 a year. On
31 December 2017, she received a bonus of �2,000 in respect of Julian's trading results for the year ended 30 September 2017. She expects to receive a bonu
C �8,000
Oliver is employed by Munton plc and earns �20,000 a year. He also receives the following benefits during 2017/18:
Meal vouchers of �2 per day (240 working days in year)
Pension advice costing �100
Ticket to sporting event from a customer of Munton plc wo
B �480
Tricia is employed by Wilton Ltd at a salary of �15,000 per year. She is also entitled to taxable benefits of �3,860. She has no tax overpaid or underpaid from previous tax years.
What is Tricia's tax code for 2017/18?
A 1150L
B 765L
C 799L
D 763L
C 799L
In 2017/18 Jacob was provided with various benefits by his employer Bony Ltd, a manufacturer of televisions, in addition to his salary of �50,000 per annum.
Identify the amount chargeable as employment income for each benefit.
Private health insurance, co
A - �800
C - �200
E - �0
Kyl Ltd has agreed to provide each of its employees with a bicycle costing �850 for use at home and for travelling to work. The bicycles will remain the property of Kyl Ltd. The company will also provide its employees with vouchers worth �25 per week for
A �0
Identify whether the following statements are correct or incorrect.
Pippin is provided with a van by his employer Joker Ltd.
Pippin has an assessable van benefit if, in addition to business journeys, he uses the van to travel from home to work.
A Correct
B - Incorrect
D - Incorrect
Gerrard works for Frame Ltd. He has use of a staff canteen which is available to all employees. The meals in the canteen cost him �1.50 per day although the cost of providing the meals equates to �2.50 per day. He uses the canteen 200 days each year. He w
C �30
Jacob receives a monthly salary of �3,000 and an annual bonus payable on 30 April each year, although the bonus actually relates to the previous year ended 31 March. His recent bonuses have been as follows:
Relating to Year ending: 31/03/2017, date paid:
A - �52,500
Emily is provided with a company flat as a benefit of her job in addition to her annual salary of �66,000. Emily's employer rents the flat at an annual cost of �15,000. The annual rateable value of the flat is �8,900. Emily makes a contribution to the ren
C �8,000
Your manager has made following statements about what qualifies as job related living accommodation:
1 - Accommodation is provided for the better performance of an employee's duties and it is customary to be so provided
2 - Accommodation is provided for s
B 1 and 2 only
Sally is provided with accommodation which originally cost her employer �45,000 in 1983. In 2008 �15,000 was spent on capital improvements. Sally first occupied the property on 6 April 2017 when its market value was �425,000. The annual rateable value of
A �18,000
Sumira moved into a house provided by her employer on 6 August 2017 when the market value was �499,000. The house cost �465,000 in January 2012. The annual rateable value of the property is �21,000.
What is the taxable benefit for the living accommodation
C �20,500
Lesley first occupied accommodation provided by her employer on 6 January 2018. The property was originally purchased by her employer in 2013 for �325,000. Capital improvements were made to the property in 2015 at a total cost of �45,000. Lesley pays her
A �3,594
Robert has an annual salary of �56,000 and has received the following benefits during 2017/18:
Childcare vouchers of �45 per week (�2,340 per year); and
Meal vouchers of �5 per day for 240 days of the year.
Robert has been receiving these benefits since 2
C �1,200
Alexandra works for an airline. She received the following benefits during 2017/18:
Gifts of jewellery from a customer worth �200; and
Provision of free flights when there are spare seats available on the plane. The market value of the flights taken durin
D �0
Hettie has worked for the same employer (a manufacturing company) for 30 years. She has an annual salary of �12,000 and has received the following benefits during 2017/18.
Long service award of an original oil painting worth �1,400; and
Free bus pass wort
D �0
Sunil is employed as a hairdresser by Hairy Monsters. He is paid �30,000 per annum and provided
with a number of benefits.
Select whether the following benefits are taxable or exempt from income tax.
Employer contributions to occupational pension scheme
A
B - Exempt
D - Exempt
E - Taxable
Since 1 January 2016 Amy has been provided with an apartment by her employer. The annual value of the accommodation is �1,500. The original cost of the apartment to her employer in 2001 was �81,000. The market value of the apartment on 1 January 2016 was
C �3,750
Duncombe Ltd purchased a flat in London in 2001 for �280,000. On 6 February 2018 the company recruited a new sales director and allowed him to live in the flat for the remainder of 2017/18. The market value of the flat in February 2018 was �375,000. The c
B �375,000
Pryor, Feinstein and Hill are employees of Boxer Ltd each earning �40,000 per annum. Boxer Ltd is to provide Pryor with a company van, Feinstein with a company car and Hill with a company bicycle. Pryor and Feinstein will use their vehicles for business a
B - Exempt
C - Taxable
F - Exempt
Joshua is given the use of some music equipment by his employer on 6 September 2017 for private purposes. At the time it was first made available to Joshua it had a market value of �8,460 although it originally cost �10,000 two years ago when purchased fo
A �987
Dewi and Dilys are married. Dewi is a basic rate taxpayer earning only a salary and Dilys pays no tax. Dilys has elected to transfer �1,150 of her personal allowance to Dewi.
Which letter will complete Dewi's tax code?
A L
B M
C N
D K
B - M
Which of the following is an allowable expense?
A Gift of fleece jackets to customers with trade logo costing �55 each
B Increase in general provision for bad debts
C Legal expenses on employment contracts
D Gift Aid donation
C Legal expenses on employment contracts
Simon takes goods from his business with a selling price of �540. The cost price is �360. He pays �100 for the goods.
Simon's accounts show the transaction as drawings of �360. What is the adjustment required?
A No adjustment required
B �80
C �180
D �540
B �80
Patrick's accounts show �16,550 on repairs and maintenance during the year to 30 September 2017:
Demolishing out-house and building new toilets = �5,950. Repainting offices = �3,600.
Installing new heating system = �7,000.
How much should be added back to
C �12,950
Paul Sarbanes is a self-employed garage proprietor in Leeds. On 22 December 2017 he made the following gifts.
Identify whether each gift is allowable or disallowable when calculating Paul's tax adjusted trading profit.
A case of wine costing �48 to a cust
B - Disallowable
C - Allowable
E - Allowable
Niamh's accounts for the year ended 30 September 2017 showed legal and professional fees of �8,000.
Which two of the following costs are not allowable in calculating her tax-adjusted trading profit?
A Fees incurred in the recovery of a trade bad debt
B Le
B - Legal fees of a successful appeal against a tax assessment
E - Cost of taking out a new five-year lease on business premises
The following sentences have been included in a draft letter to a client who is about to start a new business.
Identify whether each statement is correct or incorrect.
Expenditure shown in the profit and loss account is not always allowable for tax purpos
A - Correct
B - Incorrect
Noah is a wine merchant with a year ended 31 March 2018.
Which two of the following are allowable expenses in calculating Noah's taxable trading profits?
A A gift of a �10 bottle of wine to each of 200 potential new customers as a marketing method to enti
A - A gift of a �10 bottle of wine to each of 200 potential new customers as a marketing method to entice them to buy more wine in the future
B - Gifts to his two employees of a wine hamper costing him �60 for each employee
Flynn has been a sole trader for many years. His profit and loss account to 31 January 2018 includes the following items of expenditure.
Which two are fully allowable in calculating Flynn's taxable trading profits?
A Costs of registering a patent for trad
A - Costs of registering a patent for trade use
D - Legal costs for renewing the 10-year lease on his shop premises
William Pitt is a self-employed tax adviser in Coventry. In the year ended 31 March 2018 he made the following gifts. All of the recipients are registered charities.
1 �50 to the renovation fund for Coventry Cathedral (a local charity)
2 �50 to the World
D 1 only
Imogen is a sole trader and her accounts show �7,700 on repairs and maintenance during the year to 30 September 2017.
Repair to a newly acquired second hand machine to make it usable: �2.4k. Repairs to the roof of the office damaged in a storm: �3.8k. Red
A �2,400
Paola is a sole trader. She has deducted the two items listed below in arriving at her draft tax adjusted profits of �46,223 for the year ended 28 February 2018.
Select whether an adjustment to profits should be made for each of the following items in ord
B - Do not adjust
D - Do not adjust
Andy is a sole trader and a higher-rate taxpayer. His accounting profit for the year ended 31 March 2018 includes a deduction of �938, which is the amount of a donation made to a local hospital under the Gift Aid scheme on 1 February 2018.
Select whether
A - True
D - False
Sam is a sole trader with an accounting profit of �42,674 for the year ended 31 March 2018. The following two items are included in the accounts in arriving at the accounting profit.
Select what adjustment, if any, needs to be made to arrive at the tax-ad
A - Deduct �280
D - Deduct �490
Caroline is a sole trader and identified the following amounts which have not been included in her accounts.
Select how each item should be treated in the adjustment to profits working in order to determine Caroline's tax adjusted trading profit.
Caroline
B - Reduce trading profits by �300
E - Reduce trading profits by �200
Soria deducted the following amounts in arriving at her taxable trading profits of �65,329 for the year ended 31 March 2018.
Select whether an adjustment to profits should be made for each of the following items in order to determine Soria's final tax adj
B - Do not adjust
C - Adjust
Peri is self-employed and in December 2017 he made the following gifts.
Select whether each of the following gifts is allowable or disallowable when calculating Peri's tax adjusted trading profit.
A food hamper costing �35 to each client. Each hamper bask
B - Disallowable
C - Allowable
Huckleberry, a sole trader, has calculated the following amounts which have yet to be included in his final taxable trading profits.
Select how each item should be treated in order to determine Huckleberry's final taxable trading profits.
Huckleberry has
C - Do not include
E - Reduce taxable trading profits by �3,500
Leo, a sole trader, allowed the following amounts in arriving at his draft taxable trading profits of �180,000 for the year ended 31 March 2018.
Select how each item should be treated in the adjustments to profits working in order to determine Leo's final
A - Add back �550
D - Add back �600
Tom has traded as a greengrocer for many years. In his year ended 30 April 2017 he took fruit and vegetables from the business which cost �350. He could have sold the goods for �600. Tom has not recorded this transaction in his accounts.
The amount to be
A �600
Which of the following is an allowable expense for a sole trader?
A Repairs to a newly purchased second-hand machine. The repairs were essential before the machine could be used
B Write-off of a loan to a former employee
C Legal fees for the renewal of a
C Legal fees for the renewal of a 20-year lease
Tadzio, a sole trader, has included the following amounts in arriving at his draft taxable trading profits.
Select how each amount should be treated in the adjustments to profits working in order to determine Tadzio's final taxable trading profits.
Tadzio
B - Deduct �3,250
D - Add back �200
David began trading on 1 May 2017. On that date he brought a car into the business (business use only) valued at �10,000. The car has CO2 emissions of 128g/km
David made up his first accounts to 31 December 2017.
What is the maximum capital allowance that
A - �1,200
Terry has been trading for many years making up accounts to 31 March each year. He has however decided to change his accounting date to 31 December and makes up accounts for the nine months to 31 December 2017.
At 1 April 2017, the tax written down value
D - �17,080
Marcus has been trading for many years, making up accounts to 5 April.
The tax written down value of the main pool was �900 at 6 April 2017.
The only other asset in the business for capital allowances purposes was a car bought in 2016, which Marcus uses 7
D - �300
Sergio bought a new car at a cost of �14,000 on 7 October 2017. The CO2 emissions of the car are 60g/km.
What capital allowances can he claim in respect of the car for the year ended 31 March 2018?
A �0
B �1,260
C �2,520
D �14,000
D - �14,000
Nadia started trading on 1 January 2017. On 1 November 2017 she bought a single item of machinery for �214,000.
What is the maximum capital allowance Nadia can claim for the year ended 31 December 2017?
A �38,520
B �214,000
C �200,000
D �202,520
D - �202,520
Aimee started trading on 1 April 2017. On 1 July 2017 she bought a single item of plant for �175,000.
What is the maximum capital allowance Aimee can claim for the nine months to 31 December 2017?
A �175,000
B �150,000
C �154,500
D �153,375
D - �153,375
Jacob has been trading for many years, making up accounts to 31 December.
Jacob had tax written down values at 1 January 2017 of:
Main pool: �11,800
Car (purchased 2011 with CO2 emissions of 135g/km - 40% private use by Jacob): �14,000
On 15 May 2017 Jaco
A - �6,504
Gordon has been trading for many years making up his accounts to 31 May each year. His taxable trading profits are as follows:
y/e 31 May 2016: �12,000
y/e 31 May 2017: �14,000
y/e 31 May 2018: �18,000
What is the taxable trading profit taxed in 2017/18?
B - �14,000
Florrie started trading on 1 September 2017. She decided to make up her accounts to 30 April each year.
In the eight months to 30 April 2018, Florrie had taxable trading profits of �8,000. She estimates that her taxable trading profits for the year to 30
C - �7,000
Ursula started trading on 1 January 2017. She decided to make up accounts to 31 October each year.
Her taxable trading profits are as follows:
p/e 31 October 2017: �3,000
y/e 31 October 2018: �23,760
y/e 31 October 2019: �31,000
What are the overlap profi
D - �4,860
Ross ceased trading on 31 March 2018. His taxable trading profits were:
y/e 31 December 2016: �6,800
y/e 31 December 2017: �5,600
p/e 31 March 2018: �4,500
Ross had �2,300 of overlap profits on commencement. What is the taxable trading profit for 2017/18?
B - �7,800
Anne and Jane have been in partnership for many years making up accounts to 30 November. The profit-sharing agreement of the partnership is that Anne is entitled to an annual salary of �10,500 and Jane is entitled to an annual salary of �12,300. They are
B - Anne �73,425, Jane �74,325
Andrew is a sole trader who uses the cash basis for income tax purposes. His accounts for the year to 31 December 2017 include a deduction of �10,000 for the purchase of a car on 1 July 2017. The car has CO2 emissions of 125g/km and is used only for busin
B - Add back �10,000, deduct capital allowances of �1,800
Michael bought a painting in July 2002 for �10,000 and sold it for �26,000 in August 2018. Incidental costs of disposal amounted to �1,250. Michael made no other disposals in 2018/19. Michael had taxable income after deducting the personal allowance of �3
A - �463
Which two of the following are exempt assets for CGT?
A A vintage Bentley car
B A shop used by a sole trader in his business
C Painting worth �4,500 (cost �1,500)
D Shares in an unquoted trading company
A - A vintage Bentley car
C - Painting worth �4,500
George sold a holiday flat in October 2018. He had bought the flat in May 2001.
Select two of the following costs which will be deductible in computing George's chargeable gain
on sale.
A Cost of advertising on sale
B Minor repairs to guttering
C Installi
A - Cost of advertising on sale
C - Installing completely new heating system
Norman inherited a painting from his aunt in July 2006. His aunt had bought the painting in 1997 for �9,000. The market value of the painting at the date of her death was �15,000.
Norman sold the painting for �40,000 in November 2018. He incurred auctione
A - �23,000
Which of the following statements is true?
A The gift of any asset is always an exempt disposal
B Goodwill is an exempt asset for individuals
C Shares are always exempt assets for individuals
D The gift of a painting to a charity is an exempt disposal
D - the gift of a painting to a charity is an exempt disposal
Glad Ltd has a 10-month period of account from 1 April 2017 to 31 January 2018. The company bought a car (with CO2 emissions of 123g/km) on 4 August 2017 for �20,000. The car is used 30% privately by one of the directors.
What are the maximum capital allo
C �3,000
Posh Ltd started trading on 1 December 2016 and made up its first set of accounts to 31 March 2018.
Posh Ltd's accounting periods will be:
A 4 months to 31 March 2017, 12 months to 31 March 2018
B 4 months to 5 April 2017, 12 months to 31 March 2018
C 12
C - 12 months to 30 Nov 2017, 4 months to 31 March 2018
Which two of the following are non-trading loan relationship debits of a company under the loan relationship rules?
A Interest payable on loan to purchase property to let
B Bank overdraft interest
C Interest on loan to purchase machinery
D Interest on ove
A Interest payable on loan to purchase property to let
D Interest on overdue corporation tax
Red Ltd had the following shareholdings:
Silver Ltd 40%
Taupe Ltd 60%
Umber Ltd 75% (company is a passive company with no trade) Violet Ltd 90%
Which companies are related 51% group companies for the purposes of determining the limit for Red Ltd's corpora
C - Red Ltd, Taupe Ltd, Violet Ltd
Aquarius plc allowed the following amounts in arriving at its draft trade profits of �53,000.
Select how each item should be treated in the adjustment-to-profits working in order to determine Aquarius plc's final trade profits.
Aquarius plc included �1,09
B - deduct �1,090
F - Do not adjust
Capricorn plc has calculated the following amounts which have yet to be included in its final trade profits.
Select how each item should be treated in the adjustment to profits working in order to determine Capricorn plc's final trade profits.
Capricorn p
A - increase trade profits by �500
E - Reduce trade profits by �100
Sagittarius plc deducted the following amounts in arriving at its draft trade profits of �654,544 for the year ended 31 January 2018.
Select whether an adjustment to profits should be made for each of the following items in order to determine Sagittarius
B - Do not adjust
C - Adjust
Virgo Ltd, a manufacturing company, included �35,000 relating to pension costs in arriving at its draft trade profits for the year ended 31 December 2017. This included a closing accrual of �12,000 with only the balance actually being paid into a register
B �12,000
Pisces Ltd included �26,500 relating to interest costs in arriving at its draft trade profits. �20,000 related to interest payable on a loan used to build a new factory, including a closing accrual of �4,000. The remaining �6,500 related to interest payab
C �20,000
Scorpio plc charged the following items in arriving at its net profit for the year to 31 March 2018:
Amount written off stock to reduce it to net realisable value: �4,600. Interest on late payment of corporation tax: �16,456.
How much should be disallowed
C - �16,456
Rome plc charged the following items in arriving at its net profit for the year to 31 March 2018:
Gifts of industrial trade samples to UK customers: �950. Gifts to UK customers - wall calendars bearing company logo costing �46,50 each: �4,650. How much sh
D �5,600
Paris plc prepared its first set of accounts for the 12 months ended 31 March 2018. On 1 January 2018 it purchased a new car for �14,400 (CO2 emissions 120g/km).
What is the maximum amount of capital allowances Paris plc may claim for the 12 months ended
B �2,592
Cashew Ltd drew up accounts for the six-month period to 30 June 2018. Cashew Ltd pays interest on its �20,000 9% debenture stock annually on 31 March. The debenture stock finances the company's working capital. Cashew Ltd paid �100 interest in respect of
B �900
Gorilla Ltd commenced trading on 1 April 2017 and purchased a new motor car for �8,500 (a low emissions car) for the use of an employee (75% business use, 25% private).
What is the maximum amount of capital allowances Gorilla Ltd may claim on the car for
D �8,500
Labrador Ltd has incurred the following legal expenses in its first accounting period.
Preparation of directors' employment contracts (the directors are also the shareholders): �4,600
Issue of share capital: �2,000
Acquiring a 30-year lease: �3,000
How mu
C �5,000
Hovawart plc included the following amounts in arriving at its draft trading income of �666,888 for the year ended 31 May 2018.
Select whether an adjustment to profits should be made for each of the following items in order to determine Hovawart plc's fin
A - adjust
C - adjust
Russell plc allowed the following amounts in arriving at its draft trading income of �1,555,000.
Select how each item should be treated in the adjustment to profits working in order to determine Russell plc's final trading income.
Russell plc included �4,
A add back �4,000
F do not adjust
Spitz plc has calculated the following amounts which have yet to be included in its final trading income.
Select how each item should be treated in the adjustment to profits working in order to determine Spitz plc's final trading income.
Spitz plc has cal
A increase trading income by �2,500
F do not include
Newfoundland Ltd, a trading company, included �47,300 relating to pension costs in arriving at its draft trading income. In addition, �17,000 being an opening accrual was paid. No closing accrual was required.
What adjustment is required in order to deter
A �17,000
Pug Ltd included �33,400 relating to interest costs in arriving at its draft trading income. �13,000 related to interest payable on a loan used to purchase new machinery. The remaining �20,400 related to interest payable on a loan used to buy an investmen
B �13,000
Rottweiler Ltd acquired �1,540,000 of 10% debentures for investment purposes on 1 January 2018. Interest is payable half yearly on 31 December and 30 June each year. Accordingly, Rottweiler Ltd did not actually receive any interest during the year to 28 F
B �25,667
Duncombe Ltd purchased a flat in London in 2001 for �280k. On 6 Feb 2018 co recruited a new sales director and allowed him to live in the flat for the remainder of 2017/18. MV of flat in Feb 2018 was �375k. Co installed double glazing in March 2008 at cos
B �375,000
Arabesque Ltd prepared its first set of accounts for the eight months ended 31 October 2017. On 1 May 2017 it purchased a new car for �18,000 (CO2 emissions of 129g/km).
What is the maximum amount of capital allowances Arabesque plc may claim for the eigh
A �2,160
Puy Ltd drew up accounts for the nine-month period to 30 June 2017. The company pays interest on its �600,000 5% debenture stock annually on 31 December.
How much interest is allowable for tax purposes for the nine months ended 30 June 2017?
A �15,000
B �
B �22,500
Esquilino plc has recently begun to rent out the top floor of its office building; the other two floors are used in its trade. Building running costs of �3,000 have been incurred for the year ended
31 December 2017. In addition interest on the loan to pur
C �4,600
Turner Ltd has included the following items in its profit before tax for the year ended
31 December 2017. For each item, select the adjustment that must be made to arrive at the trading income for the year ended 31 December 2017.
Depreciation of the offic
A - add back
F - no adjustment
Which two of the following items are deductible in arriving at the trading income of a UK company which manufactures furniture?
A Employer's national insurance contributions
B Gift of a �15 bottle of wine to a customer
C Interest on a loan taken out to pu
A - employer's national insurance contributions
E - replacement of roof tiles on the company's head office building
Which two of the following items are treated as a profit or loss on non-trading loan relationships for Bright Ltd?
A Bank overdraft interest
B Finance lease interest payable on the purchase of a company car for one of Bright Ltd's employees
C Interest pay
D - interest payable on a loan to purchase an investment property
E - interest payable on a loan to purchase shares in Dim Ltd, another trading company
Walters Ltd has taxable total profits of �230,000 for the year ended 31 March 2018. However, this figure is before the effect of the following items, which were omitted from the financial statements.
Select the effect of each item on Walters Ltd's taxable
B - decrease
D - increase
Wubzy plc deducted the following amounts in arriving at its draft trading income of �468,295 for the year ended 31 August 2017.
Select whether an adjustment to profits should be made for each of the following items in order to determine Wubzy plc's final
A adjust
C adjust
Flowertot plc has deducted the following amounts in arriving at its draft trading income.
Select how each item should be treated in the adjustments to profits working in order to determine Flowertot plc's final trading income.
Flowertot plc has paid a div
A adjust trading income by adding back �4,600
C adjust trading income by adding back �1,900
Which two of the following statements about corporation tax are true?
A Dividends paid by a company are allowable against trading income
B Interest paid on a loan to purchase a new factory for use by the business is a non-trading loan relationship debit
C
C - Companies may deduct qualifying donations paid when calculating taxable total profit
D - Dividends received from UK companies are taxable income to be included in calculating taxable total profits
Universe plc deducted the following amounts in arriving at its draft trading income of �717,199 for the year ended 31 July 2017.
Select whether an adjustment to profits should be made for each of the following items in order to determine Universe plc's fi
A adjust
D do not adjust
Which two of the following statements about corporation tax are true?
A A company with augmented profits of �1.5m in both the current year and the prior year will
pay corporation tax by instalments.
B A company with a short accounting period must have pro
A - company with augmented profits of �1.5m in both CY and PY will pay corporation tax instalments
D - a company pays corporation tax at a flat rate on its taxable total profits
Which two of the following statements about corporation tax are true?
A Exempt dividends received from unrelated UK and overseas companies are used to determine
when a company pays its corporation tax.
B Companies may deduct qualifying donations paid and
A - Exempt dividends received from unrelated UK and overseas companies are used to determine
when a company pays its corporation tax.
D - Interest paid on a loan to purchase a new factory is a trading expense.
Fouette plc owns 50.2% of the shares in Tutu Ltd which in turn owns 50.1% of the shares in Plie Ltd. Fouette plc also owns 100% of the shares in Pointe SA, a company incorporated and managed and controlled in France. Fouette plc also has a 75% shareholdin
C - Two
Mountain Ltd's parent company has two other wholly owned subsidiaries, which it has owned for several years. Mountain Ltd prepared its first set of accounts for the six months to 31 January 2018.
What is the limit for Mountain Ltd for the purpose of deter
D - �187,500
Campo Ltd has taxable total profits of �225,000 for the year ended 31 March 2018. During November 2017 it received exempt dividends from UK companies of �85,000 of which �12,000 were received from an 80% subsidiary.
What are Campo Ltd's augmented profits
B �298,000
Which of the following statements about corporation tax is true?
A A company will pay corporation tax on exempt dividends received from unrelated companies
B A company with augmented profits of �200,000 for a 12 month accounting period and no related 51%
B - A company with augmented profits of �200,000 for a 12 month accounting period and no related 51% group companies will pay corporation tax on a single payment date
Select whether the following statements are true or false.
The corporation tax rate is multiplied by augmented profits to calculate the corporation tax liability
A True
B False
Companies with augmented profits below the limit pay corporation tax by instal
B - False
D - False
E - True
Venus plc owns 100% of the shares in Saturn Ltd and Jupiter Ltd. Venus plc also owns 25% of the shares in Mars Ltd and 51% of the shares in Milky Way Ltd.
What is the total number of related 51% group companies?
A Two
B Three
C Four
D Five
C - Four
Hake plc owns 75% of the shares in Bass Ltd which in turn owns 75% of the shares in Salmon Ltd. Hake plc also owns 100% of the shares in Prawn Inc, a company incorporated and managed and controlled in the USA. Hake plc also has a 65% shareholding in a dor
C - Four
Peach Ltd has owned two wholly owned UK subsidiaries for a number of years. In the nine months ended 31 March 2018, Peach Ltd had taxable total profits of �250,000 and received no dividends.
What is the augmented profits limit for Peach Ltd for the nine m
A - �375,000
Lemon Ltd makes up a 12-month set of accounts to 30 June 2017. It pays corporation tax by instalments.
When must Lemon Ltd make its second instalment payment on account of corporation tax?
A 14 October 2017
B 14 July 2017
C 14 April 2017
D 14 January 2017
C - 14 April 2017
Straw Ltd makes up its accounts to 30 November each year. It has no related 51% group companies and receives no dividends.
It has had the following taxable total profits in its first three years of trading:
y/e 30.11.16: �800,000
y/e 30.11.17: �1,650,000
B for y/e 30 Nov 2017 by 1/09/2018 and for y/e 30 Nov 2018 by installments
Stone plc has no related 51% group companies and taxable total profits of �1,000,000 for its first year of trade, which ended on 31 March 2018. It has no dividend income for the year.
When should Stone plc pay its corporation tax liability for the year en
C - 1 January 2019
Bone Ltd started to trade on 1 October 2015 and has no related 51% group companies. Bone Ltd had taxable total profits of �1,600,000 for its first year ended 30 September 2016 and �1,800,000 for its second year ended 30 September 2017. The company receive
A y/e 30/09/2016 - by 1 July 2017
F y/e 30/09/2016 - by instalments
Ivory plc has no related 51% group companies and taxable total profits of �600,000 for the six months ended 31 December 2017. It received dividend income of �500,000 during this six-month period. Ivory plc's profits and dividend income have been at a simi
A - by instalments
Gita, who is registered for VAT, runs a business selling beauty products. She gives one sample worth �10 to each potential customer. She also takes goods from stock worth �150 for her own use.
Which of these transactions is a taxable supply?
A Neither
B G
C - goods for own consumption only
Joel intends to issue a VAT invoice on 30 November 2017 for the sale of standard-rated goods as follows: Value of goods = 10,000. Less trade discount = 1,000. Less settlement discount = 450. Assuming both discounts are taken up, how much overall output VA
B - �1,710
ABC Ltd registered for VAT on 1 August 2017. It only makes standard-rated supplies. ABC Ltd incurred VAT on accountancy services relating to the business on 1 May 2017.
ABC Ltd bought a car for use by an employee for �10,000 on 15 August 2017. The employe
C - fully recoverable on accountancy, irrecoverable on car
On 30 April, Jones ordered a new machine. On 16 May, he paid a deposit of �10,000. The machine was dispatched to Jones on 31 May. On 13 June, an invoice was issued to Jones for the balance due of �45,000. This was paid on 20 June.
What is the tax point fo
B - 16 May
Julie should have registered for VAT on 1 March 2018.
On 5 March 2018, she supplied services to Wilma for �1,000 without charging VAT. Wilma is also registered for VAT and makes standard rate supplies.
How much output VAT is payable on this supply and who
A - �167 payable by Julie
Opal Ltd's VAT accounting periods are in line with its accounting year which ends on
30 September.
By what date must Opal Ltd submit its final VAT return for its accounting year?
A 30 October
B 31 October
C 7 November
D 10 November
C - 7 November
Tertia is registered for VAT. She joins the annual accounting scheme with effect from 1 June 2017 and is required to make payments on account of her VAT liability.
Tertia's total VAT liability for the year to 31 May 2017 was �90,000. The actual VAT liabil
B - Payments on account 9 x �9,000, balancing payment �27,000
Which of the following statements about the cash accounting scheme is not true?
A VAT is accounted for on the basis of amounts received for supplies and amounts paid for
purchases
B The scheme gives automatic bad debt relief
C The scheme allows deferral o
D - the cash accounting scheme is not compulsory
Linda is registered for VAT and has opted to account for VAT under the flat rate scheme. The VAT rate applicable to her business is 5%.
Which two of the following statements are true?
A Linda must calculate net VAT due by applying 5% to the value of her t
B - Linda does not have to keep records of her input VAT
C - Linda must calculate net VAT due b by applying 5% to her VAT inclusive turnover
Jane submitted her 2017/18 tax return electronically on 13 January 2019. The return had been issued to her in May 2018.
By what date must HMRC give notice if it wishes to check Jane's entitlement to the reliefs claimed in the return?
A 13 January 2020
B 3
A - 13 January 2020
Zeta is a sole trader. She submitted a paper tax return for 2017/18 on 15 August 2018. What is the latest date by which HMRC can correct an obvious error in her return?
A 31 January 2019
B 15 May 2019
C 31 August 2019
D 31 January 2020
B - 15 May 2019
James has never received a tax return. He started a business on 5 May 2017. By what date must he give notice to HMRC that he has chargeable income?
A 5 October 2017
B 5 April 2018
C 5 October 2018
D 5 April 2019
C - 5 October 2018
Todd was issued with a tax return for 2016/17 on 20 October 2017. He filed it online on 15 March 2018 and paid the tax due of �1,700 on the same date.
What is the maximum penalty for late submission of the tax return that could be imposed?
A �0
B �100
C �
B - �100
Susan's only source of income is savings income. She submits her tax return for 2017/18 on 1 October 2018.
Until which date must she retain the records used to complete her return?
A 31 January 2019
B 30 September 2019
C 31 January 2020
D 31 January 2024
C - 31 January 2020
Yolk Ltd makes up a 12-month set of accounts to 31 May 2017.
By what date must Yolk Ltd submit its tax return?
A 1 March 2018
B 31 May 2018
C 31 January 2019
D 31 May 2019
B - 31 May 2018
Pond Ltd makes up a 12-month set of accounts to 31 March 2018.
Until which date must Pond Ltd retain its records relating to this accounting period?
A 31 March 2019
B 31 March 2020
C 31 March 2023
D 31 March 2024
D - 31 March 2024
John files his tax return for 2017/18 on 31 January 2019. This shows property income of �54,000. John has purposely overstated the property expenses by �7,000 by creating false invoices for the additional expenses. HMRC initiates an investigation into Joh
C �1,400
Amelia has submitted an inaccurate return to HMRC. The error is deliberate and concealed. What is the maximum penalty HMRC could levy on Amelia?
A 100% of potential lost revenue
B 70% of potential lost revenue
C 30% of potential lost revenue
Amelia makes
A - 100% potential lost revenue
E - 30% of potential lost revenue
Employers are required to pay their PAYE and Class 1 national insurance contributions electronically if they have
A At least 250 employees
B At least 100 employees
C At least 50 employees
D Any number of employees
A - At least 250 employees
Step Ltd submitted its VAT return for the quarter ended 30 September 2017 on 14 November 2017. It paid the VAT due of �12,000 on 31 October 2017. Step Ltd had submitted and paid its VAT for the previous two quarters one month late in each case, but had ma
A - �0
Should Corporations be taxed
A. No, they are separate legal entities with separate taxable capacity
B. Yes, because they are earnings' channelled to the individual shareholders
C. Yes, they are separate legal entities with separate taxable capacity
D. No
C - yes, they are separate legal entities with separate taxable capacity
A company is resident in UK if?
A. its "Central management and control" is exercised in UK
B. it was incorporated in the UK
C. Neither A or B
D. A or B
D - A or B
Why do we distinguish between trading and non-trading profits for tax purposes? A. Because it will provide useful information to the management
B. Because the classification will be consistent with IFRS
C. Because we only can use trading loss CF against t
C - Because we can only use trading loss CF against trading profits
What are the corporate tax systems?
A. Equity, convenience, efficiency, Certainty, Simplicity and Flexibility
B. Classical system, Imputation system, Split of rate dividend-received exclusion
C. Self-assessment system
D. Tax credit system
B - Classical system, imputation system, split of rate dividend-received exclusion
Why does double taxation occur?
A. Due to overlapping tax laws of countries about the basis of liability
B. Due to levying two taxes at the same tax basis
C. Due to overlapping the basis of liability
D. Due to levying sugar tax
A - due to overlapping tax laws of countries about the basis
What are the commonly used double taxation reliefs in practice?
A. No relief and Deduction
B. Tax credit and Exemption
C. Tax credit and deduction
D. Something else
B - tax credit and exemption
Which of the following is NOT Anti-Haven Legislation Methods A. Pressure from supranational bodies
B. Use of information gathering power;
C. Exchange controls
D. Exemption Method
D - exemption method
Which of the following statements about the double taxation's exemption method is not true?
A. Income earned in state of source is considered in state of residence only for rate purpose.
B. Income earned in the state of source is fully exempt in the State
D - state of residence allows credit of tax paid in state of source restricted to the domestic income-tax rate
Tax Haven is a place where?
A. No or low tax rate
B. No transparency and no real investment required
C. No information exchange
D. All of them
D - all of them
Controlled foreign companies' legislations will applied on:
A. UK resident person who invest in foreign companies
B. Foreign companies who invest in UK
C. UK resident company who invest in foreign companies
D. A+C
C - UK resident company who invest in foreign companies