June 2021 ACCA ATX exam was – Instant Poll and comments

Not enough time to finish all. Don’t even remember those exam questions I just attempted. Does everyone remember please?

Also overseas aspects of income and capital gains tax/ PPR relief – my months did not balance, did not have time to go back and recount

Did not have a single aspect about groups! How weird! I was hoping to get groups as was feeling strong with them but nothing!

Oh no is the first question sole trader with losses. I struggled a little, I in the end decided to work on the adjusted taxable trading profit for company and also based on that post-tax profit calculated out Lucia’s income tax on her salary and dividend.

For question 1 trading losses I did:

1) Incorporation relief for Lucia’s first income from incorporated company and the chargeable gain deferral

2) Prior years profits – set off against trading profits in previous year – only one year back

3) Set off against her chargeable gain from cottage in cessation year

Think this is okay but not sure about the chargeable gains relief

How did you calculate the adjusted TTP for the company please? I think they had profit of £80k from which they paid Lucia salary of £70k, so only £10k taxable income?

Yes, I did remember to deduct NIC also, but was worried that missed something as it was very small amount of CT to pay.

I completely messed up the losses question 🙁

For question 1 loss relief – I did write below 2 option.

Carry Back-
– The loss can be offset against the carry back amount but in that case the Tax saving was coming up to 20% .

Carry Forward-.
The Incorporated profit was like £80,000 so if loss was offset as part of carry forward they would save 40% .

I think question had asked which option gives maximum tax relief, so i went with carry forward option too. I said only disadvantage will be here from cash flow perspective.

Exam was delayed by over 3 hours at the exam centre !

Question 1 Joe
Pre liquidation income and capital treatment if interim payment

Becoming tax advisers

Accounting dates and other bits 20 marks-was confused as info was given in for each month – what did you guys get ?

Question 2 inheritance and overseas property

Gift to Hugo – liable to pay CGT even if non U.K. resident after 5/4/16 for re and the 3 years after for job resi properties ?

I did Fiona’ it to get she is HRT ,so 28% CGT in U.K. property

Questions 3 and 4 – mixture of
SCOP and SIP
PRR and letting – got 81 months actual and deemed and 86 months total ownership

Mixed up with short leases ?

Sale of warehouse ,etc I calculated the proceeds reinvested eligible god rollover and said remaining gain will be taxed now

Loan to close company participator ( charged to company until waived and then in shareholder at 32.5 div rate

Was confused with the treatment for intangibles

If not for part of question 1 then would have been a pass…

It appears I got the same exam questions as you.

I didn’t manage to get to question 4 nor completed question 3.

However for the calculation of the PPR and letting relief there should have been no chargeable gain as part of the house was letter out @25%, so this period would have been time apportioned for the chargeable months for letting relief. Had it not been for the letting relief only part of the gain would have been relieved as PPR. The periods working abroad are deemed exempt period.

For question 1 regarding the disposal of fixed intangible assets for the goodwill and brand, how did you calculate the profit or disposal on the sale for the goodwill? It mentioned that the goodwill was not tax deductible but it was amortized, as such I wasn’t sure whether the calculation was simply sale proceeds less cost or sale proceeds less cost and also factor in the amortization? This caused me to waste a lot of time just trying to figure this out which I would have better spent my time doing question 4.

In hindsight I should have attempted question 3 and 4 first as those appear to be easier, rather than tackling the overseas and inheritance questions. The split year basis information through me off to the point where I couldn’t focus and gather my thoughts! As I studied hard for this and was confident going in, but mis managed my time.

Q1. Incorporation relief or BADR can be elected. Incorporation relief claim will help to defer gain to satisfy cash flow merit. BADR will also available in future, if those shares are disposed by Lucia.
There was no other consideration except share, thus gain amount needs to be deduct from share amount to determine base cost.
B) loss of ceased sole trading business will be carried forward and will be adjusted with Lucia’s own future income instead of (new company’s) LRA’s profit. There were no need to adjust the loss with previous years profit (I did that, and will not get any mark!)

Lucia’s Personal income after tax: salary 70k+ X as dividend(LRA’s T profit- 70K (salary)-class 1 NIC LESS CT @19%=X) less b/f loss of previous business less 12500 = YYY (IT lib @20%)

Post tax income: 70k + dividend less income tax @20%= Zzz [post tax income.]

Additionally, LRA can not avail £4000 Class 1 NIC relief as previous employees have exceed the 100,000 limit in last year.

C) CGT on Furnished Holiday let was eligible for BADR 10%. Proceeds less original cost not probet value(due to gift heldover relief) condition met 2 years combined holding period in last 6 years held by Lucia and her mother.

Other questions were on

Conflict of interest – husband and ex wife- ethics
Integrity and professional competence and due care issue – falsify of information by previous advisor-ethics

IHT- mix of death estate – I did consider UK farm, cash, other assets as donee’s aunt was not UK resident and not UK domiciled, further donee was UK resident but not UK domiciled. Thus, UK iht only applied as location basis. Further, APR on UK farm was not considered as the land was let out only for 2 yrs instead of 7 yrs.

VAT: capital goods scheme, vat on new building impact, vat impact of import item from overseas.

Explanation on R&D allowance for small business 130% (65% of sub-contract) on revenue exp and 100% on capital expenditures.

PRR etc can’t remember more….

I did mess altogether, no hope this time…making mind for sept sitting.

Questions were very very tricky and time pressured. No group at all!!!

All the best to all

@Koushik you seem to know what you are talking about! This was my last exam but I have messed it up big time. So September resit for me.. would love to know what was your approach to ATX studying

For those that has the paper with Q1 being liquidation
How did you calculate the gain and loss of the intangible assets?
I just did sale- cost and ignored amortisation.

Also with the gift to Hugo. I gave the uk house and said the loss from the forge in house would be a useful loss to offset against her death estate or other income.

Also working out the gift to Nori of the laptop was he just a share holder or an employee?

Really keen to know what others put.