Association of Taxation Technicians. Examination. November 2010 PAPER 6 PART I BUSINESS COMPLIANCE. TIME ALLOWED 3 HOURS (for Part I and Part II)

Transcription

1 Candidate Number Association of Taxation Technicians Examination November 2010 PAPER 6 PART I BUSINESS COMPLIANCE TIME ALLOWED 3 HOURS (for Part I and Part II) You are required to answer all questions in Part I and all FOUR questions in Part II (printed separately). Part I You must write your answers in this booklet using the space provided under each question and complete your candidate number at the top of this page. Each question carries between two and four marks as indicated in brackets. It is expected that your answers will be in brief bullet point format or summary computations. It is not expected that you will require all of the space provided. All workings should be shown and made to the nearest month and pound unless the question requires otherwise.

2 1. VAT registration is compulsory if certain conditions are met. Explain the rules relating to compulsory registration, including when HM Revenue & Customs needs to be notified of liability to register. Your answer should include an explanation of both the future and historic tests. (4) Page 2 of 14

3 2. Briefly explain the operation of the reverse charge procedure on the purchase of services. (2) Page 3 of 14

4 3. Peaches Ltd provides private medical insurance for its employees each year. The total cost of the insurance to Peaches Ltd is 470 per employee. Were the employees to purchase the insurance policy direct it would cost them 500. Peaches Ltd has 25 employees, all of whom are basic rate taxpayers, and wishes to settle the tax due on the employees behalf via a PAYE Settlement Agreement. Calculate the total Income Tax and Class 1B National Insurance Contributions due in respect of the private medical insurance. (3) Page 4 of 14

5 4. Suzanne is a director of her own company. She pays herself a regular monthly salary of 550 per month. In March 2010, she paid herself a lump sum of 85,000 and did not take the 550 due to her for that month. Calculate Suzanne s Class 1 National Insurance liability for 2009/10. (2) Page 5 of 14

6 5. Mark was given an interest free loan of 6,000 by his employer on 1 May Mark repaid half the balance after six months, and the remaining half on 1 May Calculate the benefit in kind relating to Mark s loan in 2009/10, using both permitted methods of computation. (4) Page 6 of 14

7 6. Explain how Statutory Maternity Pay is calculated, and for how long an eligible mother may expect to receive it. (3) Page 7 of 14

8 7. Ben has a tax code of 645L and earns 6,500 per month. He is considering making a charitable donation of 150 per month via his employer s Payroll Giving Scheme. Calculate the net monthly cost of Ben s proposed donation and briefly explain how relief for the donation would be given. (2) Page 8 of 14

9 8. Describe the Income Tax and National Insurance treatment of the grant and exercise of options under the Enterprise Management Incentives Scheme. (4) Page 9 of 14

10 9. Alfie is the sole shareholder of Boo Ltd, a software company. Boo Ltd has a contract with Paws plc to the value of 45,000 per annum, which is deemed to fall within the IR35 provisions. Alfie has provided you with the following information: 1) He draws a salary of 5,715 per annum from Boo Ltd. 2) He uses a company car provided by Paws plc, with a benefit in kind value of 6,500. Calculate the deemed employment payment for 2009/10. (3) Page 10 of 14

11 10. Molly has a company car provided by her employer throughout the tax year. The petrol car has CO 2 emissions of 168 g/km, was purchased for 16,500 and has a list price of 18,000. Molly pays 100 per month for the private use of the car. Molly mainly uses the car for commuting to and from work. Fuel relating to business journeys costs approximately 10 per week. Molly s employer pays for all fuel, which costs approximately 50 per week, and Molly pays 25 towards the cost of private fuel. Calculate Molly s benefits in kind for 2009/10. (3) Page 11 of 14

12 11. State the journal entries required to record the following transactions: 1) Purchase of goods from a supplier at a cost of 470 (inclusive of VAT) for cash. 2) Cash sales made of 1,175 (inclusive of VAT). (3) Page 12 of 14

13 12. An offer may only be accepted by the offeree (to form a contract) while the offer is still open. An offer can be terminated in a number of circumstances. Explain four ways in which an offer can be terminated. (4) Page 13 of 14

14 13. The Association of Taxation Technicians Professional Rules and Practice Guidelines state that a member should request the prospective client s permission to communicate with the client s existing adviser before accepting a new appointment. Explain why it is recommended that a member should communicate with an existing adviser. (3) Page 14 of 14