Business Tax (FA2016)

Transcription

1 Business Tax (FA2016) Question and answer book November 2017 AAT is a registered charity. No

2 Questions Question 1 Tax avoidance is an illegal way of reducing a business s tax bill? True or False? Question 2 What is the chargeable accounting period/s (CAP) for a company with a period of account for the 18 months ended 31 December 2016? a) CAP 18 months ended 31 December 2016 b) CAP 1 6 months to 31 December 2015 CAP 2 12 months to 31 December 2016 c) CAP 1 12 months to 31 March 2016 CAP 2 12 months to 31 March 2017 d) CAP 1 12 months to 30 June 2016 CAP 2 6 months to 31 December 2016 Question 3 How does the loss relief available to individuals and companies differ for the relief of trading losses? Select one answer. a) Companies must offset trading losses against current year total profits before they can carry back. Individuals can offset losses against other income of the current year and/or the previous year, in any order. b) Individuals must offset trading losses against current year total income before they can carry back. Companies can offset losses against total profits of the current year and/or the previous year, in any order. c) There is no difference. d) Companies cannot offset trading losses against capital gains, individuals can. Question 4 How are capital losses relieved? a) Against total income of the same year, then carry back. b) Against other gains in the previous year, then against total income. c) Against other gains in the same year, then against total income. d) Against other gains in the same year, then carry forward against future gains. 2

3 Question 5 ABC Limited has the following results: Year ended 31 March 16 Year ended 31 March 17 Trading profit 25,000 (75,000) Property income 8,000 8,000 Chargeable gains 5,000 0 Qualifying charitable (7,000) 0 ABC Limited wants to use its losses as soon as possible, how much loss will it be able to carry forward? a) 67,000 b) 36,000 c) 37,000 d) 29,000 Question 6 The corporation tax return filing deadline for an accounting year ended 31 March 2017 is: a) 31 January 2018 b) 31 July 2018 c) 31 March 2018 d) 31 March 2017 Question 7 The corporation tax return filing deadline/s for an accounting period of 15 months ended 30 June 2017 is: a) 30 June 2018 b) 31 March 2018 and 30 June 2018 c) 31 March 2018 d) 30 June 2017 and 30 June

4 Question 8 What filing penalties are due for a corporation tax return (all previous returns have been submitted on time) for the year ended 28 February 2017, if it is filed on, and all the related tax is paid on, the following dates: 1 March March June October 2018 Question 9 What is the maximum penalty charged for a deliberate and concealed error, identified by HMRC, on a corporation tax return? a) 30% b) 70% c) 75% d) 100% Question 10 What is the second instalment date for payment of corporation tax, for a large company with a year end of 31 December 2017? a) 14 October 2017 b) 14 July 2017 c) 14 October 2018 d) 1 October 2018 Question 11 Which of the following statements are true? a) Profit motive is the most important indication that an individual is trading. b) The more frequently a transaction is undertaken the more likely there is to be a trade. c) The longer an asset is owned the more likely there is to be a trade. d) If an asset is purchased it is more likely to indicate a trade then if it was inherited. 4

5 Question 12 Sort the following expenses into allowable / disallowable categories? Expense Allowable Disallowable Lease payments for Vehicle: Co2 >130g/km % % Gifts of diaries with company logo Small local charity donation Owner s wages Director s wages Extension to office Question 13 What is the submission deadline for a paper partnership tax return? a) 31 January following the end of the tax year b) One year following the year end c) 31 March following the end of the tax year d) 31 October following the end of the tax year Question 14 How long should a company, that is not under investigation, keep its records for? a) One year after the end of the accounting period b) Five years after the end of the accounting period c) Six years after the end of the accounting period d) Seven years after the end of the accounting period 5

6 Question 15 If an individual has trading profits of 55,000 what is the total amount of National Insurance that is payable for 5 April 2017? a) 3, b) 3, c) 4, d) 4,

7 Answers Question 1 Tax avoidance is an illegal way of reducing a business s tax bill? False Tax avoidance is legal, tax evasion is illegal. Question 2 What is the chargeable accounting period/s (CAP) for a company with a period of account for the 18 months ended 31 December 2016? a) CAP 18 months ended 31 December 2016 b) CAP 1 6 months to 31 December 2015 CAP 2 12 months to 31 December 2016 c) CAP 1 12 months to 31 March 2016 CAP 2 12 months to 31 March 2017 d) CAP 1 12 months to 30 June 2016 CAP 2 6 months to 31 December 2016 Long accounting periods will always be split into CAP s of the first 12 months, then the remaining months. Question 3 How does the loss relief available to individuals and companies differ for the relief of trading losses? Select one answer. a) Companies must offset trading losses against current year total profits before they can carry back. Individuals can offset losses against other income of the current year and/or the previous year, in any order. b) Individuals must offset trading losses against current year total income before they can carry back. Companies can offset losses against total profits of the current year and/or the previous year, in any order. c) There is no difference. d) Companies cannot offset trading losses against capital gains, individuals can. 7

8 Question 4 How are capital losses relieved? a) Against total income of the same year, then carry back. b) Against other gains in the previous year, then against total income. c) Against other gains in the same year, then against total income. d) Against other gains in the same year, then carry forward against future gains. Question 5 ABC Limited has the following results: Year ended 31 March 16 Year ended 31 March 17 Trading profit 25,000 (75,000) Property income 8,000 8,000 Chargeable gains 5,000 0 Qualifying charitable (7,000) 0 ABC Limited wants to use its losses as soon as possible, how much loss will it be able to carry forward? a) 67,000 b) 36,000 c) 37,000 d) 29,000 Year ended 31 March 16 Year ended 31 March 17 Trading profit 25,000 0 Property income 8,000 8,000 Chargeable gains 5, ,000 8,000 Loss relieved for current year (8,000) Loss carried back (38,000) Total taxable profits (TTP) nil nil Loss memo: Y/E 31/03/2017 (75,000) Current year 31/03/2017 8,000 Carry back 31/03/ ,000 Carry forward (29,000) 8

9 Question 6 The corporation tax return filing deadline for an accounting year ended 31 March 2017 is: a) 31 January 2018 b) 31 July 2018 c) 31 March 2018 d) 31 March 2017 Answer c): the tax return filing deadline is one year after the end of the CAP. Question 7 The corporation tax return filing deadline/s for an accounting period of 15 months ended 30 June 2017 is: a) 30 June 2018 b) 31 March 2018 and 30 June 2018 c) 31 March 2018 d) 30 June 2017 and 30 June 2018 Answer a): where a long accounting period is split into two CAP s the filing deadline for both remains one year after the end of the period. Question 8 What filing penalties are due for a corporation tax return (all previous returns have been submitted on time) for the year ended 28 February 2017, if it is filed on, and all the related tax is paid on, the following dates: 1 March March % of tax due 15 June October % of tax due Question 9 What is the maximum penalty charged for a deliberate and concealed error, identified by HMRC, on a corporation tax return? a) 30% b) 70% c) 75% d) 100% 9

10 Question 10 What is the second instalment date for payment of corporation tax, for a large company with a year end of 31 December 2017? a) 14 October 2017 b) 14 July 2017 c) 14 October 2018 d) 1 October 2018 Answer a): the first instalment is day 14 of month 7 after the beginning of the period, then the next 3 instalments are at 3 monthly intervals. Question 11 Which of the following statements are true? a) Profit motive is the most important indication that an individual is trading. b) The more frequently a transaction is undertaken the more likely there is to be a trade. c) The longer an asset is owned the more likely there is to be a trade. d) If an asset is purchased it is more likely to indicate a trade then if it was inherited. Question 12 Sort the following expenses into allowable / disallowable categories? Expense Allowable Disallowable Lease payments for vehicle Co2 >130g/km 85% 15% Gifts of diaries with company logo Small local charity donation Owner s wages Director s wages Extension to office 10

11 Question 13 What is the submission deadline for a paper partnership tax return? a) 31 January following the end of the tax year b) One year following the year end c) 31 March following the end of the tax year d) 31 October following the end of the tax year Question 14 How long should a company, that is not under investigation, keep its records for? a) One year after the end of the accounting period b) Five years after the end of the accounting period c) Six years after the end of the accounting period d) Seven years after the end of the accounting period Question 15 If an individual has trading profits of 55,000 what is the total amount of National Insurance that is payable for 5 April 2017? a) 3, b) 3, c) 4, d) 4, Class 2 NI 2.80 per week = Class 4 NI ( 43,000-8,060) x 9% = 3, ( 55,000-43,000) x 2% = , Total NI 3, = 3,

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