From the past papers — OpenTuition Forums

SSaqlain10y ago

Hey mate so there are a couple of questions where my lecturer and the ACCA paper disagree. I havent shown this to my lecturer yet but our next class is on friday so Ill do it then but I wanted to ask you about it. The questions are from https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/f6/exampapers/bwa/D15_Hybrid_F6UK_QP.pdf The two questions to which my lecturer gave my a different answer are 1 On 10 January 2015, a freehold property owned by Winifred was damaged by a fire. The property had been purchased on 29 May 2002 for £73,000. Winifred received insurance proceeds of £37,200 on 23 February 2015, and she spent a total of £41,700 during March 2015 restoring the property. Winifred has elected to disregard the part disposal. What is the base cost of the restored freehold property for capital gains tax purposes? A £68,500 B £77,500 C £114,700 D £35,800 My lecturer said the answer was D. The site shows the answer as B 13 Taxes can be either capital taxes or revenue taxes, although some taxes are neither type of tax. Which is the correct classification for the following three taxes? Value added Inheritance National insurance tax tax contributions A Neither type Revenue tax Capital tax B Revenue tax Capital tax Neither type C Capital tax Neither type Revenue tax D Neither type Capital tax Revenue tax My lecturer (and i also feel the same way) said the answer was B. the site says its D Thanks for your help!

TTTax Tutor10y ago#1

In both cases and probably not surprisingly I have to agree with the ACCA answers! In the first example the allowable cost will be made up of the original cost less the insurance proceeds (which is where you stopped) but you must also add in the amount then spent in restoring the asset - hence 77,500. In the second example - clearly IHT is a capital tax so it's now either answer B or D, then NIC's are a tax on income - either employment or self employment - that is a revenue tax - a tax on income! You have confused that term with sales revenues which is what VAT is based on - this is not a tax on income received nor capital of the taxpayer, so it is neither.