ATX*** ACCA Paper ATX December 2019 Exam was.. Instant Poll and comments ***

So how did everything think the exam went ? The first question scared me at start with the wording I could not think of what it meant by unincorporated business , sole trader should been better way put it and could not think of any more issues apart from loss relief and fact thought would sell in UK , what did everybody say about the money he was taking from the company. I thought question 2 was straight forward expect get close 20 marks on that one . What did people write about the loan between companies apart from transfer pricing rules I was stumped Also completly forgot what was the vat scheme , I can say goodbye to any professional marks ha

Hi Arm2250: I think that loan to director one also implied that it should charge the company the same rate as dividend rate 32.5% because otherwise company can avoid the high dividend tax rate and pay dividends as director’s loan for no tax? I’m completely lost in question 4 though. No idea how to use the numbers given. I think it was also expected to mention that the maximum non trading loss relief is the lower of £50,000 and 10% of total profit ?

Rollover relief in terms of patent to Durn was very confusing. 6.5 marks portion of Q1 was also very confusing

Yep I can say I completely forgot about the 32.5% rule and also about the other rule my head went out of my window

Oh dear! Confusing or what? I think this will be a March job ...

Well that was absolutely awful. Why is it when you leave the exam room you all of a sudden know exactly what the question was asking but when you’re in there you just have a brain fart!!

@BereanK said: Oh dear! Confusing or what? I think this will be a March job ...

With you on that one

Guys what have you written for Chargeable gain implications in respect of sale of subsidiary?

I wrote about the degrouping charge as result of the building and sse relief which should be available

Think you had to mention to add degrouping charge to the sales proceeds as NGNL transfer was made within 6 years of sale. What did people write about sole trader keeping his building on incorporation? I said that the incorporation relief didn’t apply anymore but not sure if that’s right :/

@mansurali said: Guys what have you written for Chargeable gain implications in respect of sale of subsidiary?

Degrouping charge added onto the sale proceeds but gain will probably be exempt under SSE

@jackie41 said: Think you had to mention to add degrouping charge to the sales proceeds as NGNL transfer was made within 6 years of sale. What did people write about sole trader keeping his building on incorporation? I said that the incorporation relief didn’t apply anymore but not sure if that’s right :/

I put the same!!

I said the same that incorporation relief would not be available but there could be ER as it's a chargeable asset

In Q2 was she supposed to pay the remittance basis charge? I thought she wasn't resident for long enough

I did Q2 last so my head was now all over the place as I was time pressured. Wish I had calmed down

@georgemaybury11 said: In Q2 was she supposed to pay the remittance basis charge? I thought she wasn't resident for long enough

Correct me if I’m wrong. But she left UK feb 17. So would have been uk resident 16/17 Didn’t come back till May 20 So uk resident 2020/21 So non UK resident 17/18 18/19 19/20 So was only a UK resident for 6 of the previous 9 years. So no remittance basis charge Atleast that’s what I have put

Yh I thought the same, deemed uk domicile as uk resident for more than 15 out of 20 years - only arising available

@nickseaw said: Remittance basis wasn’t available for her? She was deemed domiciled in uk as have stayed in uk since 1999 until 2017?

You’re right. 15 of the last 20 years. Deemed domicile so remittance only if she remits her income and is more than £2000 otherwise if she remits it

Ah god..... I think I may have missed out a whole decade now !! I did write about the 15 out 20 years, but went into say she wasn’t so she wasn’t UK domiciled Ha. Have to love the exam pressure I wouldn’t mind. But I know that area inside out. So a stupid mistake. Hoping I’ve achieved the marks around it and if anything just wasted more time than marks

Hey guys. Sorry still thinking about the exam and that 15 out of 20 years , suddenly thinking isn’t there a clause that means Something like .... If there is no tax year beginning after the 5 April 2017 and before the relevant tax year in which there were a UK resident, then the condition wouldn’t be satisfied?

Maybe I am wrong but I think SSE was not available as it was not share to share transfer. if it was then only god can save me from failing.

The exam was hit and miss to be fair. Question 1 wasn't great. I think I read it several times which didn't help the cause. Anyways my biggest gripe is that we started the exam half an hour late due to the invigilators coming late. And the hall in where we sat our exam was absolutely freexing. The boiler stopped working the night before. Everyone was complaining and I couldn't write for too long because my hands started seezing up from the cold. I went to the toilet 4 times during the exam to defrost my hands under the blow dryer lol. Don't think it's anyone's fault but when it's one of your final exams you don't want any distractions especially the coldness Anyways best of luck to everyone! Hope you all smashed it

P6 - was a horror movie :(

Well that was a hard exam to be fair!!! Few points that i want to speak about as i have been thinking about it all night and i need to let it out and see what other people wrote: Q1) Sole trader VS Limited company - Did people say that he would be taxed at a higher rate if trading as a sole trader and then speak about the different rate bands whereas for a limited company he would be taxed lower at 19%. I also said if he was sole trader he would get the £11,850 PA. I also said that dividends would not be taxable in the Limited company. I did not know what else to write!!! In regards to the VAT question about claiming back VAT on impaired debt i said if it is 6 months late and he has written it off in his books he can claim back the VAT. Q4) VAT - Capital goods scheme - I was confused here but explained that it should be part of the CGS as the building was >£250K and i worked out the initial input VAT recovery at 20% (full recovery) and at the sale, no VAT was charged so that was 0% and so he had an amount to pay to HMRC ??????? Q2) IHT - For the gift of the unquoted shares, did people work out the VALUE of this gift (By doing calculation of before and after gift shareholdings and multiply it by the relevant percentage) and then explained that there would be additional tax if Emma died within 7 years and just gave an example of the maximum IHT due if she died in 1 year... Did anyone say anything about Business property relief being available as the shares were unquoted? Best of luck to all!!!

Yes, pretty much I did the same, for Q1 -sole trader I used opening year rule to find out the trading profit for both years. Than I did the income tax for the company case and compare the two taxes. The bad debts VAT , yes is correct 6 month late when the bad debts is w/off. To improve cash flow- cash accounting scheme is preferable. Capital goods scheme is right, but I calculated the Annual Adjustment VAT/10* (% year 2- %Year one ) and because it was a fall in % was a repayment to HMRC. IHT question - yes it was a gift of unquoted shares so I did the calculation of diminuation value /combine with her husband. Value before gift less value after gift - I found out the taxable gift. Then I said the BPR relief will apply because is a trading asset and was help for 12 months ( the % of shares doesn't matter for unquoted shares ) is I remember well. I am not sure is correct but I hope I did enough to pass. What did you say about patent roll over relief- I got confused as I know roll over relief is available for fixed assets ( qualifying assets as buildings, fixed plant and machinery ) so I am not sure what I was supposed to say. I just mentioned there is a 4% cost allowance the company can claim annually. The questions were not easy but much better than June 19 when I failed, so I really hope I am done now with tax. Best of luck

@gaby12 said: Yes, pretty much I did the same, for Q1 -sole trader I used opening year rule to find out the trading profit for both years. Than I did the income tax for the company case and compare the two taxes. The bad debts VAT , yes is correct 6 month late when the bad debts is w/off. To improve cash flow- cash accounting scheme is preferable. Capital goods scheme is right, but I calculated the Annual Adjustment VAT/10* (% year 2- %Year one ) and because it was a fall in % was a repayment to HMRC. IHT question - yes it was a gift of unquoted shares so I did the calculation of diminuation value /combine with her husband. Value before gift less value after gift - I found out the taxable gift. Then I said the BPR relief will apply because is a trading asset and was help for 12 months ( the % of shares doesn't matter for unquoted shares ) is I remember well. I am not sure is correct but I hope I did enough to pass. What did you say about patent roll over relief- I got confused as I know roll over relief is available for fixed assets ( qualifying assets as buildings, fixed plant and machinery ) so I am not sure what I was supposed to say. I just mentioned there is a 4% cost allowance the company can claim annually. The questions were not easy but much better than June 19 when I failed, so I really hope I am done now with tax. Best of luck

I am not sure about the patent roll over relief to be honest - I just said that the company will be able to claim roll over relief if it re-invests in a replacement asset within 3 years after selling old etc... NOT SURE????? Did anyone do for part C the sale proceeds of the patent less the (60K Cost - 60K TWDV) and say the tax will be on that amount???

@gaby12 said: Yes, pretty much I did the same, for Q1 -sole trader I used opening year rule to find out the trading profit for both years. Than I did the income tax for the company case and compare the two taxes. The bad debts VAT , yes is correct 6 month late when the bad debts is w/off. To improve cash flow- cash accounting scheme is preferable. Capital goods scheme is right, but I calculated the Annual Adjustment VAT/10* (% year 2- %Year one ) and because it was a fall in % was a repayment to HMRC. IHT question - yes it was a gift of unquoted shares so I did the calculation of diminuation value /combine with her husband. Value before gift less value after gift - I found out the taxable gift. Then I said the BPR relief will apply because is a trading asset and was help for 12 months ( the % of shares doesn't matter for unquoted shares ) is I remember well. I am not sure is correct but I hope I did enough to pass. What did you say about patent roll over relief- I got confused as I know roll over relief is available for fixed assets ( qualifying assets as buildings, fixed plant and machinery ) so I am not sure what I was supposed to say. I just mentioned there is a 4% cost allowance the company can claim annually. The questions were not easy but much better than June 19 when I failed, so I really hope I am done now with tax. Best of luck

OOOPS for the IHT calculation, i worked out the value by doing only Emma's shareholding before the gift multiplied by the Price of the % of shareholding ( I think it was like 50%) less the Price with the % holding after the gift (I think was 35% less)...

Yes, I said something about TDWV, but I was not sure if is balancing charge or allowance. I think I said is charge.( I was so stressed ) I asked a colleague in tax department and she said the patent will be allowed for rollover relief if as you said the amount will be reinvested in a qualifying asset 12 months prior to or 36 months post the sale. ( the non qualifying assets apparently are the ones you can claim Capital allowances). I think you need to work in a tax department to pass this exam :(

Hi everyone. Exam was very time pressured. I feel the style of the questions have changed compared to previous years. I mentioned BPR would not be available as her son was not Uk resident at the time of the gift! For the other question Not deemed Uk resident even though been in the uk for more than 15 out of 20 years because has not been resident from tax 2017/18 onwards. Question 1 it already mentioned bad debt so using cash accounting scheme whereby revenue is only recognised on cash received in bank no bad debt would occur as accounts have NOT been prepared on an accrual basis. Very confusing question 1 .. so many different details and years in that question. Question on patent ROR was another struggle All the best everyone for the results!

Hi can anyone please remember the marks distribution in each question?