ATXJune 2021 ACCA ATX exam was - Instant Poll and comments

How did everyone find it? I am still really confused on the gift to Hugo,.. can you transfer a Foreign property loss to the U.K.?

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

I did not have Hugo. Q1 sole trader with losses, chargeable gain, some Vat? Q2 i think rollover relief and gift relief? Q3 IHT got muddled with death estate and foreign assets Q4 SIP snd CSOP shares

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!

Can anyone remember What the last question was on. Share schemes/ letting relief and ppt but can Remember section 3

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 loss relief, I can see the question provided different years profits for prior year but I didn’t use that as question said no opening year trading relief nor terminal loss relief so I used transferring business to company-trading loss relief to set the final period losses against the first income Lucia received from the company. Anyone has better ideas?

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

Anyone know to solve the question with Factory A, B, warehouse and this rollover 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 basically thats what I have done, I also deducted Employers class 1 NIC.

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 :(

Hi There, it looks like we both had same paper. With regards to question with Factory A, B, warehouse and this rollover relief? This was my response -Factory A was part of Capital Gains Group with Stella( I think) holding all the shares so as part of CGG on connected company purchase they can claim Roll Over Relief. I said with regards to Warehouse it was from unconnected parties as such ROR was not available but I'm not sure if this is the right approach.

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.

Lucia salary of £70k :- I think they had asked Lucia's post tax income here. So I did take salary as 70 K then deducted Personal Allowance then I gave NIC after that i did show a computation of post tax income Salary less tax payable. Hope so this is correct....who know hey!!!

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

Another question was on remittance basis - explanation on disadvantages and why not available once the recipient becomes UK deemed domicile through 15 yrs of UK resi in last 20 yrs..

@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

@Koushik you had the same exam, good to see i got the same point on most of your brief points above so fingers crossed i did ok

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.

Not sure if this is right but I apportioned the gain for the time is was used in business and said this can be transferred as rollover relief. It should be offset against the warehouse as the FACTORY B would be treated as a sale of no gain no loss and lowering the base cost even more could lead to a high regrouping hchsrge if they separate so better held against the warehouse purchase

joannao wrote:Anyone know to solve the question with Factory A, B, warehouse and this rollover relief?

I apportioned the gain as well but to reflect the time the Factory A has not been used for business. I then used it against Factory B, cause I thought this 30% of a warehouse not being used for business is not right for the rollover relief. But the factory A wasn't used whole time in the business too, so I was very very confused what to do here.

I apportioned the gain as well but to reflect the time the Factory A has not been used for business. I then used it against Factory B, cause I thought this 30% of a warehouse not being used for business is not right for the rollover relief. But the factory A wasn’t used whole time in the business too, so I was very very confused what to do here.

rachelmin wrote:Not sure if this is right but I apportioned the gain for the time is was used in business and said this can be transferred as rollover relief. It should be offset against the warehouse as the FACTORY B would be treated as a sale of no gain no loss and lowering the base cost even more could lead to a high regrouping hchsrge if they separate so better held against the warehouse purchase

Yes you could be completely right I didn’t clock the new warehouse was only used 30% business related. I wish we could take a look at the questions ... but then I would just be ob be obsessing even more...

Agreed with all of your points. Fingers crossed for getting that magical 50%!

SandraaB wrote:Unfortunately I did not get to the end of intensively fixed assets treatment either ,but for PR relief – – he had 6 unqualifying month when he went second time abroad as this was not preceded by the actual occupation

Damn you are right, at the start of the period when he was working abroad he purchased the property! I think I failed this exam! The accounting periods you were suppose to compare the two profits for the first two tax years had the accounting date been changed to July rather than March. There would have been less profits to pay tax on as for March there were 5 extra months of profit charged.

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

I included the amortisation for both goodwill and brand. The wasted a lot of time on the goodwill cause it said that the amortisation was not tax deductible. My calculation for both were sale proceeds less cost, plus amortisation. Think it through like capital allowance treatment, if amortisation for the brand is tax deductible/capital allowance part of the cost will need to be decreased so when it is sold, a higher profit/balancing charge will be made. Despite the goodwill is not tax deductible, but it has been amortised in the accounts, so the accumulated cost (cost less amortisation) will be deducted against sale proceeds to work out the profit or loss on disposal.

I read it as the amortisation was not taxed deducted in the accounts - ie ) it would have been added back i the accounts for tax purposes. It's very annoying because the questions really aren't structured in an easy to read way that you can actually understand what's going on. And it's so time pressed it's hard to write down all these assumptions But it's just four marks!! I'm painfully optimistic all those this is decreasing by the minute

To be fair under such time pressure it was hard to spend too much time to gather thoughts. I didn’t spend long reading the scenarios, but had a quick look and proceed with answering. I didn’t think this exam was hard, given more time I would have pass. In hindsight I would have started from question 3 and 4 first.