ATXACCA Paper ATX December 2020 Exam was.. Instant Poll and comments

Ok, exam mainly losses

Hi did anyone do the Irish ATX exam? How did you get on? Hoping for a pass although some parts in section A were tough (especially the 7 mark question on liquidation) ,the rest of the paper wasn’t too bad and i’m hoping those question see me through

Part 1 35 marks PET calculation (related party transfer) 6 Marks Trading losses unincorporated business 19 marks VAT (annual accounting, registration date and claiming vat before registration) 8 Marks Part 1 25 Marks Redundancy package and premium accommodation taxable benefits- 6 marks EIS scheme 9 marks Ethics- becoming tax advisor 5 marks Can’t remember the rest for this part Part 2 Mainly residency status and effect on inheritance tax by becoming UK domicile and tax implications 20 marks (3 sub questions) Liquidation (accounting periods and CGT) 10 marks Cessation losses 10 marks

Q 2 3 and 4 were ok. The first question was a disaster for me, other than ARF. Fingers crossed didn't cost the exam!

Agree I went blank on Question 1 part b the losses

yea i thought the 35 marker was tough enough... against the clock too... think the first q was about the individuals buying the property or the company.. i said the company should sell it as they could use the loss the indivuals cant cos its ringfenced... i didnt give ER or RR to the guy selling the the premises in Galway? but gave ER to him selling his shares on liquidation... what did yee come up with?

Yea, i also gave him ER on the liquidation and i said the other woman didn't qualify for either ER or RR as she was only there 2 years even though she was over 55, i did that 35 marker last as i took one look at it and moved on! also that VAT section 70 0% exemption (or whatever it was) completely caught me out probably got 0 on that one, think it was worth 3 marks might get 1 mark as a sympathy vote hopefully

for Q 4, the second disposal, was that the holding co exemption? i think the first disposal was a clawback of the Gain that they would have originally got in teh group.. For the gift/inheritance i gave your man PPR Relief, said in my reccommendation, they should get married so that the prop can be given to his wife with no tax triggered, and the children can get GT1, Didnt give them CT3 as they already used it up with the firs give they got from their mothers aunt, but dunno if i was right...

Yeah i said the same recommendation. i think i may have missed the PPR so i put a same event credit, not sure why i missed that i think i may have messed up the threshold on the gift for some reason now in hindsight, was hoping for 6/7 out of 15 marks there after exam so maybe i got it through the rest of the working of the life interest etc i put the participation exemption too but it was more of a gamble than anything and i don't know if my point were strong enough to gain much marks Can remember that first disposal question at all.

oh yea missed the same event credit.... got its soo hard remembering it all!! yea fingers crossed for the 50!

Oh yea i put that clawback too as it was only 9 years instead of 10 years?, anyway doesn't matter now i guess, wont worry bout it till Jan. Best of Luck in your result

yup thats it! i said they should wait to sell for another year and then no clawback.... Good luck too! im soo bad for the postmortum of the exam but it makes me feel better :-)

carsmac wrote:yea i thought the 35 marker was tough enough… against the clock too… think the first q was about the individuals buying the property or the company.. i said the company should sell it as they could use the loss the indivuals cant cos its ringfenced… i didnt give ER or RR to the guy selling the the premises in Galway? but gave ER to him selling his shares on liquidation… what did yee come up with?

Yea, i also gave him ER on the liquidation and i said the other woman didn't qualify for either ER or RR as she was only there 2 years even though she was over 55, i did that 35 marker last as i took one look at it and moved on! also that VAT section 70 0% exemption (or whatever it was) completely caught me out probably got 0 on that one, think it was worth 3 marks might get 1 mark as a sympathy vote hopefully

I'm terrible at remembering exam papers & also missing some of the mark allocations so please correct if possible. Question 1 - 35 marks a) partnership loss - relief options available (5) B) whether incorporation relief should be disclaimed (15) C) iht on gift of cash to son (6?) D) unexpected income tax refund (5) Formatting (4) Question 2 - 25 marks Salivo? Expanding business - either by renting new machinery or by purchasing with loan a) i) State Loss relief options available £20000 loss (?) ii) Explain & determine best use of £20000 loss (?) b) Compare after tax finance position after 7 years of trading depending on whether the asset is rented or bought (?) c) Flat rate/annual vat scheme & affect on vat liability on leaving the scheme (specifically in relation to rent paid on machinery?) (?) Question 3 - 20 marks Tom Juliet & Opal a) i) eligibility for remittance basis (3) ii) remittance basis vs arising basis (?) b) IHT implications of electing to be uk domiciled for iht purposes (?) c) Determine residence status of daughter (5) Question 4 - 20 marks a) single company i) final 2 accounting period loss ii) explain best use of losses and state unrelieved losses b) winding up i) periods of account (3) ii) amounts distributable to shareholders (4) iii) corporation tax implications of distribution to company with 6% shareholding (3)

On the winding up question where was i supposed to use the indexation allowance? Was it on part c cost of shares or somewhere in part b? Think i messed up part b - i put the disposal through capital allowances and crystalised the gain to calculate the corp tax and deducted that from the proceeds? Question 1 - iht on gifts to son. Do you need to include more than 1 scenario here i just did death before taper relief comes into effect on 1st gift? It mentions not to include taper relief i think?

Residency part was only 1 out of 2 ties i believe. 1 night spent in uk accomodation available for more than 90d. Her parents dont qualify as close family? Started work in march so not substantive work Remittance basis - i put no rb charge as only 2 prior uk resident tax years. Unremitted > 2k so she has to claim remittance basis ( it wont be automatic). Claiming means loss of personal allowance and annual exempt amount vs not claiming (arising basis) means use of personal allowance and annual exempt amount. Does the remitted gains go into capital gains or nsi?

Re remitted gain, i was running out of time and put the gain with employment income of i think 16000 under arising basis not sure if that was correct. Opal was not resident in the year asked in teh exam under automatic ties test. However I thought opal was “He” lol I sat in morning time- only one questions commoms are q3 (remittances and domicile) and q4 (liquidation) when was the second acconting period ends? When the trading ceases and winding up completed?

Anyone take ATX MYS here?

I got the question wrong, but the 2nd winding up period ends 1 year after it starts and so on until completion. (Ceasing trade doesn't change this)

Re liquidation question part c: it was held by a company if i am remembering correctly. I put that it would be a capital distribution & less than 10% shareholding so no relief available? For the terminal loss question: what did you do with the capital loss? Does it set off against trading income in the same year? I wrote that it can't be carried back, not sure if thats right. Did we have to include unrelieved qcd in the final figure?

Forgot to mention that the election was irreovacable. I put that her residence nil rate band would start to be tapered if her overseas property exceeded £40k since she would get the full value of her husbands estate. If she didnt elect and husbands death is more than 7 years after transferring 50% of the house does she get to use the full 325k of spouse exemption against the death estate? I wrote something along those lines, not sure if it is right tho

I can't remember much about the exam lol, it was all a bit rushed. There was a related party question in number 1 wasn't there (Uk exam)? Did the guy give away 200 shares out of his 20,000 or did i read that wrong? I just included himself and wife in related party not sister?. On q3, i put that if she chose the remittance basis there would be no charge as hasnt been resident long enough but would lose personal allowance and annual exemption for CGT, think i got a difference of 1600 in the end? Not sure if thats right. I was pretty annoyed with the terminal loss question on q4 as i'd studied that well but i just went blank, was there any overlap profits can anyone remember? I didn't put any. I also didnt make any kind of notes apart from the loss memo so i didnt mention the terminal loss i calculated could be carried back 3 years... might have got half mark or mark just for saying it :(. There was a question about annual accounting for vat, i didnt study that so didnt give much of an answer but i remembered could claim input vat for 4 years prior to registration and 6 months for services so hopefully half marks on that. EIS shares, entitled to 30% tax reducer, crawled back if sold before 3 years, no CGT if kept for 3 years? Overall, i thought it was a fair exam.... i've still probably failed but could have been much worse if that makes sense.

Re q 4 I think if i remember the final 3 periods had a capital loss then a capital gain and then a capital loss. I didnt note it lol but i think capital losses can only be relieved by capital gains and cant be carried back so i carried the 1st one forward to the middle one. Middle capital gain i set off against trading loss of same year. Last capital loss i left unrelieved?

Yes i put 31 jan 2021 as second accounting date

Can anybody remember much about q1? For 35 marks i didn't write much. Value of PET transfer, i just knocked off the AE available taking into account previous transfer, was that it or have i messed up? Related party question and then best way to relieve losses unincorporated business. What else was there?

Re liquidation, i put 2 accounting periods where: 1 jan - 31 march and then 1st April to 31 Jan...

You are right mark, transfer value via related party transactions 200 shares were transferred and share price was 28£ before and after transfer i think. £5000 cash will have been deducted from AE Losses maximum savings as per calculation was offsetting against future year profit £80000. But matters to consider with client was Timing of relief, uncertainty of future profit, cash flow etc

Aaah yes i havent read that 1st question properly, completely skipped the budgeted next year profits even though i read it so didnt write about it. I remember about a couple of disposals too? One was paintings.... i put it was exempt as cost and proceeds were individually less than 6000 but i then waffled on about whether it could be considered a trade... i thought i better write something lol.

Yeah good point painting could be considered a trade as there quite a few disposable but to be honest due to loads of information provided and less time i was rushing and still could complete 90% exam. Not easy to write about everything.