ATX*** ACCA P6 June 2018 Exam was.. Instant Poll and comments ***

Q1. 17 marks was very difficult to get. Is there any inheritance tax implication because gift of office premises wasnt free.

It was mention clearly BPR not available

@wasimkhan18 said: It was mention clearly BPR not available

That's what I thought.

I also sat the UK variant.. and thought it was awful, even though I scored high marks in my course assessments! Question 1 .. I practised SO many IHT and CGT questions at home I thought I was ready. Yet never came across a question with a sale at under value rather than a gift. So had no idea what the value of the transfer was. Ended up guessing that it was the fall in the value of the estate which I thought should be MV less proceeds but still cannot find a sample question to compare it to. Entrepreneurs relief question.. again, I had learned the rules re > 1 year, 5% voting rights etc but nowhere in my study text does it mention ER after cessation! Lots of silly mistakes, ie not noting Jessica's pension should have been limited to 3.6k rather than the full 40k. Was disappointed there was nothing in regards to DTR, RBC, Conco (not much on corp tax generally), share schemes. Disappointed it ended up this way esp as it's my final exam. Best of luck to everyone though!

I was also thinking about same treatment MV less Consideration received but wasnt sure. I wrote both aspect.

Hi guys wasimkhan and everyone else What did you write for the uk non residence was to do with the remittance basis etc…also there was a 3 marker saying was gift relief available? Also there was a question saying is entrepreneur relief available and what would be the tax increase in selling in 2019 the warehouse then June 2018 What did you guys write for that?

@dskinner83 said: For the non residence bit I put that only his income and gains from the UK would be taxed whilst non resident, and that as he was non resident for less than five years, any gain on assets which he owned before moving abroad but sold whilst non resident would be taxed in the tax year of his return. Remittance basis is only relevant where the person is resident but not domiciled. in this case he was going to be domiciled but not resident so rules are different.

I wrote similar to you, nothing about remittance basis.

Me too, I don't recall mentioning the remittance basis.. In regards to the 3 marks for gift relief, I can't remember answering anything to do with that. So either I missed it/forgot about it during the exam, or I answered it but just can't remember the question you're referring to

hi yes iw rote about remittance etc remitted income temporary residence and the remittance charge fingers crossed was my third attempt made some silly mistakes

@tayrahman said: Me too, I don't recall mentioning the remittance basis.. In regards to the 3 marks for gift relief, I can't remember answering anything to do with that. So either I missed it/forgot about it during the exam, or I answered it but just can't remember the question you're referring to

I think it was the same question? He was gifting an asset to his daughter and selling another asset... I think. Can't remember much anymore and certainly don't remember what I wrote.

@johnmoore said: hi yes iw rote about remittance etc remitted income temporary residence and the remittance charge fingers crossed was my third attempt made some silly mistakes

Remittance basis only comes into it if he is not UK domiciled. I believe it said in the questions he was UK resident and UK domiciled before moving abroad.

yes but when he moves aborad and no split year is taken into account while there he may become a non resident oh yh actually your right oh well whatever I wrote the twmporary non residene part

I genuinely think if I relaxed in the exam and kept composed I could have passed I made so many stupid mistakes...I will sit it again in September because even thought it was thirs attempt I feel I can pass but these stupid mistakes are killing me

Unfortunately P5 has the lowest of all pass rates

@qaiseric said: Well looking at all the comments. Makes me think I did a lot things incorrectly. No IHT to be computed in Q1 because it was not a gift. But he sold. No IHt on sale.

Complete guess (and not what I did) but I believe the gift was the difference between the Market Value and the price sold for given they were connect persons.

@saiga said: What about maximum pension contributions allowable to avoid charge in question 4?

I believe the first year was £3,600 max as she had no income (oh wait, there was property income... damn). I didn't know this myself but it was stated on the tax rates pages so I went with it. I then spoke about the threshold and what note and just guessed at £40k.

@karanpreetrobin said: q1: there was no IHT as the cottage was sold. CGT: As it was sold to connected party MV should have been used? first year max pension could be 3600 ( as no relevant earnings) second year up to 40k plus c/f allowance from last year

@dskinner83 said: I put the maximum pension contribution as £3,600 in the first year (2018/19?) since she only had rental income which is not relevant for the purpose of calculating pension contributions. She also hadn’t been a member of a pension before so couldn’t bring forward any annual allowance. For the following year, she had the £40,000 annual allowance and the unused allowance of £36,400 from the previous year, which makes a maximum contribution of £76,400. (I think her share of partnership profits were greater than that, so that would have been the maximum she could contribute without an annual allowance charge). Don’t take that as gospel though, my head was spinning by that point!!

These make sense for the pension contributions. I got the £3,600 just because I was staring at the tax rates wondering the write and saw that. The second year I just guessed at £40k. Hopefully there were 2 marks for that (one for saying £40k and one for the £36.4k from the previous year).

Hi Guys 2018 June P6 exam papers is out and its in ACCA website please check.

@mohamedruzaik said: Hi Guys 2018 June P6 exam papers is out and its in ACCA website please check.

Thank you!

do you think this new format is better? we have no choice any more man I don't want to see the paper as it looks soo easy looking at it now :( the stupid mistakes man! it wasn't that hard actually when you look at it now when do the answer come out

I did the same do relevant earning some from propert income if yes then the 76400 was incorrect if not then 3600 ws correct

I thought the exam was “alright” in comparison with March 2018 sitting, where I thought for sure I’d pass but failed by 3 goddamn marks. Q1 The IHT - let’s just say I guess my way through this one. If I remember correctly Snowdon paid consideration of £225k but the house was worth £260k, my thought process said that the net gift was £35k. From this I deducted 2 years annual exemption and then because we were calculating the gift at death I deducted the £325k - £318k, not sure how right this but my reasoning was that the CLT is chargeable on death regardless of whether it was 7 years or not. From my understanding only PET have the 7 year rule, correct me if I’m being daft! The 17 mark question there was two elements of it, dear me I only did half of it! Ran out of time and didn’t even do a conclusion! Did anyone notice that you needed to calculate the employers NI on the salary or did I go too deep into it?? Secondly it took me a while to realise that the £22700 was calculated because he had the personal allowance!! when his income increased he lost the personal allowance!!! The second half the VAT I seriously missed out the marks on this! Completely floundered here! Please let me know what your thinking is on what I’ve written!

It was a mix between income tax and VAT! There was two parts to this question!

Uuuuugh looking at that paper now does not fill me with confidence.

Sorry in advance for the length of this! Q1 part 1, never come across this scenario before so did the MV less proceeds do 260-225=35k less 2 annual exemptions so £29k GCT, from the date of sale going back 7 years prior left £7k of NRB (I put an assumption that the spouse NRB was not available, they gave no info), then the usual 40% and taper relief. For CGT, £260k less cost £165k = £95k gift relief hence base cost of £225k what he paid less £95k = £130k. Q1 part 2, far too long to say all, don’t remember, the only thing I remember doing for partial exemption was adding back the 24% irrecoverable VAT to the expenses for the expansion plans A and B (pretty sure this is part wrong!). The pre tax additional profit I remember my figures being very similar with numbers like £84,385 and £83,853 Q1 part 3 was hopefully a gift. I then did Q4, part a I remember something about 20% MV of the laptop and the redundancy package was the MV it was gifted or if higher the MV at date provided less the benefit for the year which was higher IIRC. The stat red pay reduced the ex gratia limit to £12k hence the taxable element was £20k. Part b was current year loss relief (insufficient earnings), previous year (save the red pay at AR 45% and some at 40%) or the extended CB to 15/16 where some tax saved at 40%, some at 60% hence was the best option. Part c I also went with £3,600 (rental income didn’t specify Furnished Holiday so I stated assumption it’s not relevant earnings), then the next year £40k plus the unused £36,400. I then did Q2, part a Steam and Ghost NGNL transfer as part of gains group and G had joined group by the date of building sale. For Wagon trade loss b/f only usable by Wagon generating trade profits, the loss in the year however could be Group relieved however only for the corresponding period as G only joined group on June 18. Part b on VAT, the non-EU import charge VAT on entering country and then claim input on next return, despite it saying no VAT in that country. For the EU sale charge standard rate as the company was not VAT reg. Part c I said Dee Co, less than 25% OSC so CFC does not apply, for the other the low profits exemption doesn’t apply as non-trade income over £50k despite profit under £500k, then for the low margin I added the operating expenditure to the accounting profit to get turnover of £3,480,000 and I was clutching at straws with the 10% margin so said the taxable profit of 350 over 3,480 was was below 10% but I’m sure they would have a CFC charge for one?! Part d i said current year claim, carry back, then carry forward. Not sure if correct, but I said group relief too. I might have also mentioned that they could take a 14.5% repayment but better to save 19% with group relief especially given it would reduce instalments (q stated you can’t get out of instalment threshold). Finally, q3! Part a was gift relief but time apportion so only on the period it was used in the business. For part a 2 I think I referred to dying within 3 years of the gift hence no taper relief available. Which led on to the last 12 marks of the exam in part b and c! My mind completely blanked on me at this stage. I made reference to being temporary non-res hence the warehouse being bought before he left would still be UK CGT regardless of when he left. I almost fell into the trap of sell it when he’s abroad and save CGT! Once I realised this, I froze and couldn’t figure out what the benefit is of delaying the sale. For the first scenario I said the cost of £72,000 had to be lowered by the rollover gain of £16,000 so £56,000. I can see now that he’s only reinvested £72,000 not the £78,000 so maybe rollover of £10k to lower the cost to £62,000?! Add on the proceeds for the gain. For scenario 2, I deduced no rollover because of the time, basically made it up and I’m sure is wrong. So felt like I did well for 88 marks of the exam and just flopped the last 12 marks. I’m hoping I got the marks early on for the pass. When I look back, I’m sure stamp duty should have been in there somewhere!

what dk id you write bout research development losses

I wasn’t too sure so writ what I mentioned in my previous post. For 7 marks I assume they wanted 7 points on how to relive the losses and how you would choose which is best. I’m sure most of this is to do with R&D. The only decent points I recall making was they can elect for the tax credit of 14.5% but I don’t think I mentioned what that would relate to ie how much of the loss you get the credit on. The options as far as I’m aware are the standard carry back, carry forward and the tax credit. Though I may have said to group relieve the loss which I’m not sure you can do! UPDATE: a google search is suggesting you can group relieve the R&D loss too which makes my answers argument that a better to group relieve and save 19% CT then take a 14.5% tax credit.

In Q2 Part C. it was large company so ALT must be 11% rather thn 14.5%. and In Q 4. Gift relief will be crystallize when transferor become non resident following the 6 year from date of transfer. So when Max leave UK GIFT relief will crystallize

A PET always uses the Annual exemption (unless it’s already used), so for example £26k transfer less the AE for current year and previous year of £3k each leaves a gross chargeable transfer of £20k (not actually a GCT during the lifetime of the donor). On death, the £20k figure is used because though an annual exemption is not available on death, it was utilised on the lifetime transfer. That’s my understanding anyway.

I thought Q1 was relatively fair, other than the tricky IHT value which I hadn't done anything on really either. I then attempted Q2, Q4, before leaving Q3 until last. The lack of choice between questions threw me slightly, I definitely didn't do well on Q3 I thought it was horrible. I also hadn't really done anything on CFC's so just guessed that one. I thought the R&D question was tricky also, I couldn't really work out what they were actually asking? My initial thought when I came out was that I hadn't quite done enough but wasn't too disheartened as I would keep it fresh and do it in September alongside my Strategic Business Leader exam but I'm absolutely gutted to find out this morning that ACCA UK have changed their exam days and they'll be on the same day in September so I can only sit one. I was due to start my SBL course tomorrow night but I haven't got a clue what to do now

Does anyone know when the June 2018 answers will be online?