ATX*** December 2021 ACCA ATX exam – Instant Poll and comments ***

Guys! What did you put in question 4 about 16 month period and payment? It was for 8 marks. I feel like I screwed in it completely. No any VAT deminimis in UK variant. It seems everything I focused on to learn actually was not there. Had IHT on gift to trust on shares in unquoted business. BADR question was about the limit of 1 million testing if applicable. Also had investors relief and incorporation relief. It was a bit weird one.

I ran out of time for the 8 mark question for the 16 month period. It was a change of accounting date and we had to use overlap profits to work out the amount due for that year to make it in line with a 12 month period. But I didnt complete it as I just did not have enough time. i foucsed on the other easier marks. Gift of shares and related property - that was a nice one. So was the one before that with the sale of shares to sister Elberta which was just an undervaluation and did have investors relief of 10mill plus gift relief of partial amount and the rest CGT at 10%. The question on the shares where it was transferred to son or daughter was related property so had to take into account husband and her. Hopefully I got that right. In terms of the first big question, what did you guys do for the equipment re incorporation relief? Did you include it as part of a gain? I think the total gain was under 1 million so it qualified for BADR (ALL of it as goodwill and building did too). I am just not sure how I should have treated the equipment where on the main pool there was a nil balance??? The goodwill qualified as it was transferred to an unconnected company where ownership was less than 5% Also the capital losses realised after Atearka purchased Hipak? I said it was allowable as they were not pre entry capital losses. However, the trading losses were.

I feel the same in q1 about profit and overlap. Why it was given where it should have been used?

About losses it was like cf before the acquisition trading losses and so I said they will be restricted as the change of ownership for 5 years The capital losses where as I remember 20 July 2021. Acquisition was 1 July 2021. And there was also a gain as well in the year. So I applied the losses within Hipak first. And only then it can transfer to A. The trust question was CLT paid by donor so 25% applied. Less annual exemption and NRb but she had pre transfer of cash /probably 68,000/ so it will reduce nrb.

I thought the 35 mark was a tough one and threw me straight away so I did it last! I cant remember what question, may have been the 35 marker but there were a few years trading profits.....I didnt even use them as couldn't work out what they wanted from me with them! The 16 month period question i thought I did ok on. Again cant remember what question but completely forgot to include the overlap profits. I felt the uk resident type question was a fair question and straight forward so fingers crossed for good marks there. I always find the exam a complete blur once I come out

I ignored the cash completely within the cgt iht question as just thought cash is exempt from cgt but didn't think it through for nrb :(. Oh and annoyingly didn't even make a remark about cash being exempt for cgt

I honestly couldn’t say whether i did really well or really rubbish ? I thought you had to use the overlap profits and work out the income for the cessation period to work out how much of the basic rate was left to tax the gain left after the bdar of £330k? So some was taxed at 10% & some 20% Anyone else do that?

Lou82, You are right cash is exempt from cgt. But it will be a part of iht when you calculate the CLT and we need to include it part 7 years transfer But the question was to calculate the iht - nothing about cgt

avbosip wrote:Lou82, You are right cash is exempt from cgt. But it will be a part of iht when you calculate the CLT and we need to include it part 7 years transfer

I think I was just loosing the plot slightly

Thats kind of what i did but in a very vague fashion. And forgetting the overlap profits

I forgot overlap as well. Well will see in January. X x

How i answered...no idea if right or wrong Q1 part a was about selling assets to a business of a unincorporated trader. I worked out gain on GW and Building would transferred and chargeable gain which will qualify for BADR. Equipment would be entitled for capital allowances so would have a balancing charge on the trading profits. I mentioned GW will attract BADR because the transfer to MO Ltd is not a close company. CGT would be at 10% but only for element up to £1m lifetime max for BADR rest at 20% Part B I think it provided profits on cessation but when I ran the numbers it used up the BRB so CGT at 20%. The sale was to a Plc company where incorporation relief would apply 100%, so although Nico was employee of the company, held the assets/shares for more than 2 years (combined period of sole trader and plc acquistion) it would not qualify for BADR on the eventual sale of shares (partly) because he does not own 10% or more. There was mention about VAT on the assets...I simply said TOGC would mean no VAT...building was over 3 years so exempt unless option to tax is chosen (which is not the case) VAT other matters - mind went blank here It also asked any matters around the building transfer....I thought hmm must be talking about SBA when I mentioned about. There was mention about non tax advantaged shares...I simply said no tax on grant date but income tax on exercise date...(there was little numbers so made up my own) I did say class 1 NIC would apply because because shares are in plc which are readily convertible to cash. I forgot to mention about CGT on eventual sale of shares but then again maybe question said talk about income tax ...so might not be relevant. In all this rush to answer the question I forgot to present this in report format ...prob lost a few marks here. Q2 mentioned Investor relief applies because it was newly subscribed shares after Mar 2016. There was a mention of sale of subsidiary where SSE would apply but had intangible asset transfered at tax nuetral basis where degrouping charge applies as under 6 years....I could not remember exact rules in the exam so guess add to proceeds of shares (which is wrong ..should be included on the company leaving group) Q3 was about residency ties test. My conclusion she is UK resident in 2022/23 Calc Income tax on arising basis for UK tax ...had to include UK salary and DTR would apply (when I ran numbers the OS tax was lower of two) Everlyn changed her domicile by choice but dies in 2 years. I said as per IHT rules domicile of choice won't apply until after 3 years lapse and thus will be subject to UK IHT. I worked this out assuming Residence nill rate band applied as decendant (son) got main residence house. Though I noted it was over £2m (apparently the RNB is meant to be restricted if over £2m but unsure examinable for ACCA) There was question about transfer into Trust which is CLT ...so I worked it out at 25% but now reading other answer I think I forgot to use the NRB so maybe it was not chargeable. CGT I said if charged to IHT the will qualify for gift relief so no charge...but reading answer it was cash so no CGT on cash ...so probably thay was the correct answer. There was a question of gift shares cheaply to sister ...I worked it out as gift relief (balance) applicable but chargeable gain on profit element (I.e cheap shares sold for less cost) CGT @20% because I think she was additional rate payer. Another question on investment property income. The loan acquisition cost I said allowable expense to property income (guess) The fridge replacement cost allowable at New cost less price received on selling old fridge. Both these item would get 45% tax relief as she was additional rate tax payer But the capital loan repayment not allowable any circumstances.... The interest element was deducted not from property income but income tax reducer at max 20% tax relief. Q4 there was loss relief and capital loss...the capital was not pre acquisition so i just assumed company would need to net off against gains first so new parent cannot have this loss ...the trading loss was before acquisition but question clearly said no change in trade or conduct...so I guess cannot use loss for 5 years by group but can carry forward loss in meantime. Last past was odd and seemed abit too easy I think for ATX....must more to this It has 16 month period (remember it's a ltd company and not sole trader so cannot reduce the profits assessment with overlap profits - which there was none) I simply split over 2 accounting periods of 12 month and 4 months .....pro-rata profits....trading loss bf above netted off trading profits and net gains overall (capital loss against capital gain) all taken to first 12 months The TTP for both period I applied CT @ 19% Then worked out payment dates 9 months and 1 day after each Accounting period. Like I said abit too easy for the marks so must be more to the story.

A lot to do in 3 hours 15 mins (scream!) ... Tried to put something down for every part - even if it was only a sentence! Glad it's over.

I don’t think there’s a degrouping charge if SSE applies on that one?

Bilal, did you have you tuition with Kaplan? Just I think we have been in the same online group. ?

With respect to equipment and capital allowances, you can still have a gain on the equipment even if it qualified for capital allowances. It will be a wasting chattel with capital allowances. What you cant have is a capital loss. At least that is what I understood it to be. What I found strange is that it didnt give the cost the item was purchased for. I scanned the information numerous times. I was very usure about this one.

Hello avbosib, Yes I was on kaplan live online. Hope we done enough to pass ?. Don't want to waste time resitting. If I pass moving onto my last paper SBL next. All the best with your results..we can have a six weeks break.

i think you had to work out the other income to work out how much of the basic rate band was remaining (think i calculated about £5k) on the last question, the 4 month period qualified them as a large company (1.5m divided by 4 companies/12*4 (months)) so had to list the quarterly payment dates I believe. some nice questions on sufficient ties, domicile, related property or IHT. nothing on IR35/Partial Exemption/share schemes - seemed like a nice paper to me but will never know until results day!

Hello Bilal! That is nice to see some people from the same Kaplan group...:) I had two last this session. Just hoping for the best. Perhpas, about Q4 saga - i did 12 month and 4 months as well. Considered instalments payments as well and provided augmented profit details... Sppoke to some people this mornign and they beleive overlap will not applied in Ltd... I woke up this morning and remembered that Q4 last part about 16 months - it was like "assuming that no losses applied advice on the payments date..." so it seems no any losses needed to be applied from part (a) and no losses should have been applied. This is a trick which ACCA tried to catch on everyone. Agree with Jenkzzy - no IR35 (which I would personally prefer) or complex share schemes - it was only one small question about non advantage scheme shares on Plc in Question 1, it was like for 5 marks...

BTW for @PQmagazine ( i know you read the forums and put it on your website) - there was a girl next to me in Manchester who had a tech issues as well... She was typing and in the middle of exam - an alert appeared. Some tech support people came straight away to her, took pictures of this message. But she was luckily resolved straight away.

Anyone on here do the Irish Tax variant for ATX? What did you make of the paper?

irena2017 wrote:Does anyone remember a question about patent in requirements? There was information given about it, but I did not use it because there were no question about it.<br>I think I missed it and remembered at home only.

I remember there was intangible patent. If I remember correctly it was patent transferred with the capital gain group and company was sold. So potential SSE applied on degroup charges…. If I remember correctly.

Was the question on the residency status for 20 marks or 25 marks?

ak2401 wrote:

jenkzzy wrote:i think you had to work out the other income to work out how much of the basic rate band was remaining (think i calculated about £5k)</blockquote

Yes there was a note saying be careful of what CGT rates you use, then clocked the dates and realised. Yes about £5k that’s what i made it too.

Praying ive written & done enough to pass, don’t want to do it again ?

brilliant! i don't think i've seen many other people do this part of the question so glad someone else had a similar figure! also don't want to have to resit so praying for at least 50%!..

avbosip wrote:Hello Bilal! That is nice to see some people from the same Kaplan group…:)<br>I had two last this session. Just hoping for the best.

I think it was "assume no losses are group relieved" or something similar, so would have been carried forward. agree with you re the patent - no calcs were required so needed to talk about chargeable gains group so NG/NL, degrouping charge and then SSE as >10% and 12 months in prior 6 years, so whole gain would be exempt.

I thought exam was ok but it was just me who could have done better specially on computation level marks but due to time constraint it's really hard to focus on those tiny details of question, which can change the answer completely...