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When a group company acquires an asset at nil gain nil loss, the gain on that asset shall materialise if the company is then sold outside of the group up to 6 years after the transaction. Valentine was sold outside of the group, therefore Wilds gain will crystallise, ie. degrouping charge.
@joemilburn said:
For question 4, it looked to me like one was employed and the other wasn’t.For the one not employed this would be charged as dividend income.
For the one employed I worked out the income charged and class 1A NIC
This is correct! It was a closed company and one of them was not employed he was just a shareholder. Therefore it was a deemed dividend and no class 1a was payable by the company.
Any idea why it was still a closed company?
Overall exam was tough 1st attempt and will be resitting in June
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The trading income from numa would have been CYB calc as first year.
can anyone remember the actual scenario for the Valentine and Wild transactions? I can’t quite remember but thought that it was only the building that was sold and not Valentine? Could have misread it in my haste!
think I missed the fact one was not employed therefore no class 1a, still probably only half a mark missed! Wasn’t it a close company as pretty much run by the two 20% shareholders (father & son) with the others being minority shareholders? Think I mentioned the niece giving further control as associated but I think I was clutching at straws by then!
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Can’t quite remember the name of the holding company but think Valentine was sold to Bone? Correct me if I’m wrong…
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It then featured in a group relief scenario where rain was not part of the group, even for AIA purposes. I wasn’t able to relieve enough of company C’s (can’t remember name) profit by using the capital allowances to get it out of being a large co. and therefore payments on account due…£1.5m / 3 companies. Question stated 4 to throw you off the scent, but Rain was not part of the group.
Losses b/f couldn’t be used for group relief, another banana skin they left in there to trick.Did you put down the Annual allowance would be split by the group ? so 200,000 split between the members? and one member joined part way through so would be timed apportioned?
im I talking rubbish or im I right lol
Yunusmulla, this is exactly what I said but did not mention apportionment.
I really struggled with this exam and mostly because I spent way too long on question 1 and did not leave myself good chance for other 3 questions. I believe I did question 1 well, just hope I scored at least 20 marks on other 3 questions, not much hope for it.
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The company was called Vine, it had £130k of ppe expenditure to which I apportioned £130k of AIA, the profits were still greater than £500k for the year.
I got really stuck on that question, I did not know what to do with AIA allocation.
Hi there, I forgot most of the questions, if you start reminding me I would start sharing with you, how you were suppose to actually about every requirement.
Many are talking about the Annual Investment Allowance, look fellows the company that joined on 1 January 2018 is related for the purposes of AIA from the following year. So there were only two related companies which could share the AIA of 200K in any way they can, both had expenditure of less than this amount on equipment so both can claim the max amount spent as AIA in the year 2018.
The other 3 companies each had their annual limit of 200k and all of them could claim all the expenditure on equipment as an AIA for the year.
Any Disagreements?
A degrouping charge would have arisen on the sale of the company which would have been added to the proceeds and would have qualified for substantial shareholding exemption and hence no tax consequence.
Yes you are correct, NUMA is subject to CYB rules and hence income from 1 August to 5 April 2018 would subject to tax in the tak year 2017/18
BBP is available for trading companies if the company is an investment company, BPR is denied.
The benefit provided to both shareholders had difference, one is caught by the employement income provisions while the other is not.
Hence for one is a taxable benefit equal to I guess it was 32% of 9100 and related NIC, for the other was equal amount of dividend income taxed accordingly.The after tax cost of the two cars to the company was their purchase price of 7K something and related tax expense for the three years until sale that was none other than the related NIC. But wait one thing more there was writing down allowance as well for the three years at 8% being a high emission car on the purchase price I calculated. This would give you the net after tax cost to the company. Any objections friends?
The first five marks on Question 2 were straight forward on ethical issues, can anyone tell me what the rest of the questions was about, I forgot and I need to discuss this with you.
Please share the requirements of Question 1 as well, first part was about whether Hiruki should opt to disapply incorporation relief, the answer was Yes he should otherwise ER was not available on a later sale of shares. What were the other parts about I forgot? Lets share and discuss?
De grouping charge arise when you acquired a subsidiary or any other companey at no gain no loss mean 75% of Group but you sold it within six years. A stamp duty arise within three years of acquisition. I don’t remember the exact situation but if the situation like above then degroup charge may arise along with stamp duty.
Munted I agree with you but some students were saying that no de Group charge arise I am puzzled what the exact senario was.
Munted I divide the whole group in two one is rain and others and as rain was controlled by individual so separate AIA limit and others have their own AIA limit .the limit they have already been crossed and the Remaining amount would still go to general pool this was my treatment ,I don’t know I am right or wrong.
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