*** F6 December 2012 Exam *** Instant Poll and comments***

Unsure about Q1 and 2 and left IHT too 😀 i hope things go well.

Q5 part b was (10600-4000), Was there any fuel benefit in question 1? Q2 Tax was at 26% and limits divided by 2 ( subsidiary). Q4 a- In both situations net incoming cash was less then actual cash received if she had continued self employment, Q1 Salary for 8 months and profit of 3 months in total (1month first year and whole second period profit). Basic limit was extended but no Personal allowance. Gain arising on goodwill was nil 🙂 thats what i did.

Q1:

FHL made a loss: needs to be carried forward; cannot be offset against gain of Property Two.

Car benefit: I think CO2 was 147 or 148, so round down to 145, then (145-125)/5 = 4 + 15 (base figure) + 3 (diesel) = 22%

Building society interest had to be grossed up (*100/80), dividends as well (*100/90). Prize from premium bond is not taxable.

Self-employment: added together gain from both periods, subtract overlap profit and subtract capital allowance.

Employment: the figure given was per month, so multiply by 8.

Q2: I found this hard since I wasn’t sure whether I should start with Trade Profit before Taxation or with Total Profit.

Q3: Set up 1985 share pool: bonus issue is not an indexation event; rights issue is; perform indexation again before they sell shares.

Land: use calculation for part disposal. I believe the work done counted as “extension”.

Property destroyed by fire: I calculated roll over relief: I think I came up with a chargeable gain of 16,600 since this was the amount not rolled over. But someone earlier in this thread said that an investment property was bought, so roll over relief would not be available. I cannot remember the wording of the question. Does anyone remember if roll over relief was available or not?

Q4: you had to calculate corporate tax, NIC and income tax for both scenarios: Scenario 1 (director is paid): calculate NIC 1 primary, income tax, and add the NIC 1 secondary they subtracted already; no corporate tax. Scenario 2: corporate tax (80000 * 20% = 16000) and then tax on dividends. 10% on first 35000, then 32.5% on the rest. Then compare total tax with the figure they gave you for self-employment: if your figure is higher, there is no tax advantage. Scenario 1 is definitely worse than self-employment. Scenario 2 was slightly worse than self-employment for me but it seems I made a mistake somewhere since other people said there was a tax advantage.

Q4, b (or was this Q3, b?): there was something about incorporation relief. 150,000 good will (cost: nil). The first part was getting 150,000 in shares. This leads to no chargeable gain since everything is incorporated. The alternative was 100,000 as stocks and 50,00 as cash: the gain attracting incorporation relief was: 100,000 / (100,000 + 50,000) * 150,000 = 100,000. 150,000 – 100,000 = 50,000 becomes chargeable. But there were 39,400 losses: so 50,000 minus 39,400 = 10,600. Minus annual allowance of 10,600 means no taxable gain.

Q5, a: pension: 133,000 could be paid into the pension

Q5, b: Look up ISA limit, subtract what he paid already and this is the figure he can pay into the ISA. (It would be wrong to use half the ISA limit! This is what you would’ve had to calculate if he had paid into a stock ISA and wanted to pay into a cash ISA)

Q5, c: Gift 200,000 to daughter: minus 6000 (annual exemption for two years): 194,000 becomes a PET.

Donation to trust: 450000 minus 3000 (annual exemption): first 325000 nil since PET is not considered. This leaves us with 120,000. 120,000 * 20% = 24,400 GBP. Or if Tim pays: 120,000 * 20 / 80 = 30,500 GBP. Total consideration: 447,000 plus 30,500 = 477,500.

IHT: PET becomes chargeable. 194,000 within nil rate. 325,000 – 194,000 = 131,000 left in nil band. 477,500 – 131,000 = 316500 needs to be taxed. 316500 * 40% = 126,600 minus taper relief 4-5 years (40%) 50,640 and minus the 30,500 paid already.

Does anyone know when ACCA will make the December F6 paper available on their web site along with the correct answers?

@tbm13 we have done quite same thing in exam 😀 but in Q4 there was corporation tax in both conditions 1 and 2. 🙂 other than that i agree that there was no tax being saved as net cash incoming was less in both conditions as compared to Self-employment.

@angleo86 said:
So I’m 105% sure I made some silly mistakes, how much marks do I lose if my final answer is wrong but my methodology is correct? (for instance adding something even though its listed to be subtracted in my workings?)

Check marking scheme in exam kit or past papers but i think you’d get marks for correct percentages used as per taxation rules and limits on your calculated income. In case your income figure is wrong you wont loose that much marks.

for q4 part a, we have to first calculate the revised summary regarding income tax, nic and corporate tax for 2 given scenarios and then compare them seperately with the above scenario in order to findout the savings which sophia gained by opting the given scenarios , and then discuss them seperately

The comments are interesting!…I made some silly mistakes as well…hoping for the best…..its so much to do in so little time…u have to think on ur feet……and then u panic when u realise u r running outta time…hope i can put this paper behind me!….what was going on in question 4 though with the NIC?

Q2, Corporation tax: I struggled a bit with the Interest Income: there was a strange presentation of this. Anyone remembers what they got? – I did this way: amount actually received (which was used by Clueless in the calculations on the Computation) less accrual at 01 April 2011 plus accrual at 31 March 2012 – so it was in fact a slightly different number from the one Clueless used.

I got corporation tax payable at something like 95K, or may be 97K. Anyone remembers what they got as the final answer?

(marginal company, 26% less marginal relief, the TTP was after the deduction of 900 gift aid (but which was previously added back when calculating trading profit)

kirinski said 8 minutes ago:
@tbm 13:

When insurance proceeds are received, it is irrelevant whether it’s investment asset or not which is being replaced. It could have easily been a painting or antique necklace or a persian carpet. I feel quite strongly about this one

If an assets is lost or destroyed then the receipt of the insurance proceeds is treated as a normal disposal. Rollover relief is available if the insurance monies are used to purchase a replacement asset within a period of 12 months.
In the exam, the insurance proceeds was not fully invested and it has to be taxed as a chargeable gain.

and after giving paper my friend telling if u don;t attempt any qus u will b failed if u have done good enough in other qus also. is it true ?

@admin thank you for giving such right tips 😀 i relied a bit on them and you got it right in f6, Thumbs up 😀

@mohammadbangash said:
^ plz someone confirm

No there’s nothing like that. you’d be assesed on the questions you’ve attempted so leaving the question doesen’t matters at all.

@captmario said:
there was a small part in question 2, something related to preparing accounts in ‘iXBRL’ format? i never heard of iXBRL thing what is it?

FA2011:
Corporation tax online filing and iXBRL tagging
All limited companies must now file their self assessment corporation tax returns
online and pay any corporation tax that is due electronically. There are no changes to the existing deadlines for doing this. A return must still include a self assessment of
the amount of corporation tax payable, although if filing is done using the software
provided by HM Revenue and Customs the amount payable is calculated as part of the
filing process.
Along with the tax return, limited companies must also submit supporting tax
computations and a copy of their accounts to HM Revenue and Customs. These must
be submitted online using inline eXtensible Business Reporting Language (iXBRL).
This is a standard for reporting business information in an electronic format using
tags that can be read by computers. Small companies with simple accounts can use
the software provided by HM Revenue and Customs, and this will automatically
produce accounts and tax computations in the correct format. Other companies can use:
• Other software that automatically produces iXBRL accounts and computations.
• A tagging service which will apply the appropriate tags to accounts and
computations.
• Software that enables the appropriate tags to be added to accounts and
computations.
The tags used are contained in dictionaries known as taxonomies, with different
taxonomies for different purposes. The tagging of tax computations is based on the corporation tax computational taxonomy, which includes over 1,200 relevant tags.
These changes apply where a return is filed after 1 April 2011 in respect of an
accounting period ending after 31 March 2010.