A BIG THANKS TO

FOR THIS MOCK

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ACCA MOCK
TAXATION(TX-UK)

Time allowed
3 hours and 15 minutes
All questions are compulsory and MUST be attempted
This paper is divided into two sections:
Section A: 3 objective test case questions
5 questions worth 2 marks per case
Section B: 2 × 20 mark questions (mainly scenario based)

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SECTION A
1 Sarah
D £3,805
(50,000 - 9,500)s × 9% £3,645
(58,000 – 50,000) x 2% £160
Total payable £3,805

2 Mr Clap
C £1,150
Capital gains tax
Basic rate band remaining = £37,500 – £17,500 (w) = £20,000
So 10% x 11,500 £1,150
Working: Taxable income £
Salary 30,000
Less: Personal allowance (12,500)
Taxable income 17,500

3 Ash and Clive

D £145,000
Total Ash Clive
£ £ £
1.1.20 - 30.6.20
Balance 2:1 120,000 80,000 40,000
1.7.20 - 31.12.20
Salary (£20,000×6/12) 10,000 10,000
Balance (1:1) 110,000 55,000 55,000
_______ _______ ______
240,000 145,000 95,000
_______ _______ _______

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4 Fun Ltd
D £119,700
Corporation tax liability year ended 31 March 2020
£
Trade profits 550,000
Capital gain 80,000
Taxable total profits £630,000
_______
Corporation tax FY 2020
630,000 x 19% £ 119,700
_______
Tutorial note
Dividends are not a taxable form of income for a company

5 Jon
B As it is more than £10,000

6 Simon
A
Payment Date 31.1.21
Balancing payment - 2020/21 £
(5,730 + 1,800 + 9,000 – 4,100 – 1,480) 10,950
Note: capital gains tax is paid in full 31 January following the tax year, but does
not affect the payments on account due for the following year.

7 Frank
C
£
Class 1 secondary national insurance
(20,000 – 8,788) × 13.8% 1,547
Less: Employment allowance (4,000)
_______
Nil
Class 1A national insurance
5,000 x 13.8% 690
______
Total payable 690
______
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8 Scott
B

9 Huge Ltd
B
Corporation tax £384,000
Number of instalments : n/3 = 10/3 = 3+1/3
Each instalment 3/10 x 384,000 £115,200
Final instalment 1/3 x 115,200 £38,400
Due date for paying the final instalment 14 June 2021

Note: If the CAP is less than 12 months in length the first payment is made on the
normal due date (6 months and 14 days from the beginning of the CAP) and
subsequent payments are made at three month intervals, with the final payment
being due in the fourth month after the end of the CAP.

10 Sam
D
CLT after exemptions 780,000
NRB 2020/21 (325,000)
_______
14.11.20 CLT(1) 455,000
_______
IHT × 20% £91,000
_______
11 D
An individual must keep their non business tax records for 22 months from the
end of the tax year (one year from 31 January after the tax year end). An
individual must keep their business records for 5 years from 31 January after the
tax year end.

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12 A
J Plc year ended 31 March 2021
D Ltd year ended 31 May 2021
Non-coterminous year ends.
D Ltd formed a group with J Plc group on 1 September 2020.
The overlap period is 1 September 2020 to 31 March 2021.
So D Ltd can surrender to J Plc the lower of:
J plc 360,000 × 7/12 = £210,000
D Ltd 240,000 × 7/12 = £140,000

13 Paul
C
Note: Paul does not meet any of the tests to determine automatic overseas nor
automatic UK residence so the ties with the UK must be assessed. With a house in the
UK and having spent more than 90 days in the UK in each of the previous 2 tax years,
Paul has 2 ties to the UK so based on the number of days spent in the UK during
2019/20 would be considered UK resident.
14 Joy
C
The potentially exempt transfer is calculated by reference to the diminution in value
of Joy’s estate as a result of the gift on 1 September 2020.

Before making the gift After making the gift Value of PET
£
No of shares Market value No of shares Market value
£ £
1,750 £848,750 1,400 £560,000
£288,750
100% £485 × 1,750 80% £400 × 1,400

15 Hope
B 2020/21
Car Benefit
17% x 26,320 = £4,474
CO2 emission car between 51 and 55 grams per kilometre
13% + 4% (diesel) = 17%

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SECTION B
Barbara
16 A
Sale of business
Premises:
Sale proceeds 225,000 [½]
Original cost (125,000) [½]
________
Capital gain 100,000
Goodwill:
Sale proceeds 50,000 [½]
Original cost (-) [½]
_______
Capital gain 50,000

Machinery and inventory are exempt assets

17 C
Note: Actual and deemed occupation periods qualify for PPR. The last 18 months
of ownership will qualify for PPR provided the house was the main residence at
some point but other periods of absence will only count if straddled by actual
occupation before and after. In Barbara’s case, she does not return to live in the
property after the world cruise so cannot claim for this to be a deemed occupation
period.

18 D
Note: The gain on the sale of the business will use any remaining basic rate band so
the entire remaining gain on the sale of the house will be taxed at 28%.
19 B
20 A

21 C

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22 C
Note: The marriage exemption is £5,000 and Peter and Jack are father and son. This
is Peter’s only lifetime gift so he would be able to claim the annual exemptions for
both the year in which the transfer is made and the previous year.

23 C
Note: The gap between the transfer and Peter’s death is 5-6 years

24 B
Death estate £
Estate 880,000
Less:
Exempt legacy (440,000)
_______
Chargeable estate 440,000
_______
IHT payable:
440,000 × 40% = £176,000

25 A
Note: The tax on lifetime gifts becoming chargeable on death is always paid by the
donee, which here is Jack. The due date for death tax is 6 months from the end of
the month of death.

26 C
Note: Under the ‘future prospect test’ traders must register for VAT if at any time
they expect their taxable supplies for the following 30-day period to exceed £85,000.
P Ltd realised that its taxable supplies for March 2021 were going to be at least
£100,000. The company was therefore liable to register from 1 March 2021, being
the start of the 30-day period.

27 A

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28 B
Pre registration input VAT:
Goods on hand purchased within 4 years max (108,600 x 20%) 21,720
Services within 6 months of registration (22,300 + 32,700 = 55,000 x 20%) 11,000
Total input VAT recovery £32,720

29 D
The VAT on the car is not recoverable as motor cars are blocked items. The VAT on
the machine will be £120,000 x 1/6 as the figure given is VAT inclusive.

30 C

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Section C
31
(a)Taxable trading profits for 2019/20, 2020/21 and 2021/22.
Accounting Capital
Profit Allowances Profit
(W1)
£ £ £
1.5.19 – 30.6.20 60,984 (2,184) 58,800
1.7.20 – 30.6.21 37,200 (1,479) 35,721
Working
(W1) Capital allowances
1 May 2019 – 30 June 2020 (14 months)
Main pool Capital allowances
£ £
Medium CO2 motor car 10,400
WDA
10,400 × 18% × 14/12 (2,184) 2,184
______
TWDV cf 8,216
_____
2,184
_____
Year ended 30 June 2021
WDA
18% x 8,216 (1,479) 1,479
_____ _____
TWDV c/f 6,737 1,479
_____ _____

Year Tax year Taxable period Taxable trading profit

1 2019/20 1.5.19 – 5.4.20
11/14 × 58,800 £46,200
2 2020/21 Year ended 30.6.20 £50,400
12/14 x 58,800
3 2021/22 Year ended 30.6.21 £35,721

9 months overlap profits = £37,800

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(b) Taxable total profits for each of the chargeable accounting periods
1.4.20 – 31.3.21 (12) 1.4.21 – 31.5.21 (2)
CAP (1) CAP (2)
£ £
Trading profits
434,000 × 12/14 372,000 62,000
Less:
Capital allowances (W1) (11,160) (39,725
_______ _______
Taxable total profits 360,840 22,275
_______ _______
Capital allowances

Working
(W1) Capital allowances for each chargeable accounting period
CAP (1) 1.4.20 – 31.3.21
AIA Main pool Capital allowances
£ £ £
TWDV b/f 62,000
[WDA
62,000 × 18% (11,160) 11,160
______
TWDV c/f 50,840 ______
11,160
______
1.4.21 – 31.5.21 (2m)
AIA addition 38,200
AIA
100% × 38,200 = 38,200
Restricted to upper limit
1,000,000 × 2/12 = 166,667 (38,200) 38,200
______
Nil
50,840
WDA
18% × 50,480 × 2/12 (1,525) 1,525
49,315 39,725

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(C) Income tax liability 2020/21 for John

Non-savings income
£
Employment income (W1) 178,017
Property business profits 6,730
_______
Total income 184,747
Less:
Personal allowance (Note 1) (Nil)
Net income/Taxable income 184,747
Less: Personal pension contribution (W5) (16,000)
_______
Adjusted net income 168,747
_______
Extend bands
Basic band 37,500 + £16,000 = £53,500
Additional rate band £150,000 + £16,000 = £166,000
Income tax £
53,500 x 20% 10,700
112,500 × 40% 45,000
18,747x 45% 8,436
_______
Income tax liability 64,136
_______
Tutorial note:
(1) No personal allowance is available as John’s adjusted net income is £168,747
which exceeds £125,000
Workings
(W1) Employment income 2020/21
£ £
Salary 184,000
Employer’s contribution to the pension
scheme is a tax free benefit Nil
Mileage allowance received
5,960 × 60p 3,576
Less:
AMAP (4,270 + 510) × 45p (2,151)
_____
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Mileage allowance benefit 1,425

Car benefit (W2) 4,347
Fuel benefit (12% × 24,500 × 5/12) 1,225
Loan benefit (W3) 1,620
Gold club subscription 1,400
Less:
Allowable expenses
- Amount paid into the occupational
pension scheme (£4,000 x 4 years) (16,000)
_______
Employment income 178,017
_______
(W2) Car benefit
12% x £36,225 [1½]
(W3) Loan benefit
Average method £
Interest that should have been paid on the average loan
2.25% × 72,000 (W4) 1,620
Less:Interest he paid ( 1,270)
_______
350
_______
(W4) Average loan in 2020/21
84,000 + 60,000/2 £72,000
(W5) Investment in personal pension scheme
Annual Used allowance Unused c/f
£ £ £
2017/18 40,000 36,000 4,000
2018/19 40,000 36,000 4,000
2019/20 40,000 36,000 4,000
2020/21 40,000 36,000 4,000
______
36,000
Notes:
(1) Both employer and employee pension contributions count towards the annual
allowance so the amount of unused annual allowance each year is £4,000 [40,000 –
(28,000 + 8,000)].
(2) The unused annual allowance can be carried forward for three years.
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(a) Tax adjusted trading profit for the year ended 30 September 2020
32 £
Profit per question 219,700 [½]
Add: Disallowable expenses
Depreciation 28,859 [½]
Re-painting offices allowable 0 [½]
Extension (note 1) 19,800 [½]
Entertaining customers UK 3,600 [½]
Entertaining customers Overseas 1,840 [½]
Political donation 740 [½]
Advertising (note 2) allowable 0
Gifts to customers (note 3) 660 [½]
Gifts to customers (note 3) 910 [½]
Premium paid for a short lease (note 4) 20,000 20,000
Less: Capital element
2% x (10 – 1) x 20,000 (3,600)
______
Rent paid in advance 16,400
_____
Allowable expense/10 1,640 x 3/12 (410) [1½]
Less: Capital allowances (W1) (18,409)
_______
Tax adjusted trading profit £277,290
_______
Working
(W1) Capital allowances - y/e 30 September 2020
Main pool Special rate pool Capital allowances
£ £ £
TWDV b/f 48,150 9,200 [½]
Medium car
Car (2) 20,400 [½]
Disposals
Car (3) (8,500) [½]
Car (4) (12,400) [½]
______ ______
60,050
Balancing charge (3,200) (3,200) [1]

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WDA
60,050 × 18% (10,809) 10,809 [1]
Low CO2 car
Car (1) 10,800
Less: FYA (10,800) 10,800 [1]
______ ______ ______
TWDV c/f 49,241 18,409
______
Tutorial notes:
(1) The extension of the office building is not deductible, being capital in nature.
The building has been improved rather than repaired.
(2) The donation to charity where S Ltd received free advertising in the charity’s
newsletter would count as advertising expenditure and an allowable trading
expense.
(3) Gifts to customers are only an allowable deduction if they cost less than £50
per recipient per year, are not of food, drink, tobacco or vouchers exchangeable for
goods and carry a conspicuous advertisement for the company making the gift.
(4) The premium payment of £20,000 is disallowed and an allowable amount
needs to be calculated and deducted over the life of the premium.

(b) (i)
Sale proceeds 125,000 [½]
Original cost (28,000) [½]
_______
Unindexed gain 97,000
Indexation allowance
0.476 x 28,000 (13,328) [1]
Indexed gain £83,672
_______

(ii) Rollover relief can be claimed where qualifying replacement assets are
purchased within a qualifying period.
Qualifying assets include land and property used in a trade. [1]
The qualifying period runs from 12 months prior to the sale and up to 36 months
after. [1]
However full rollover relief is only possible where all of the proceeds from sale
are reinvested. Here £7,500 (125,000 – 117,500) of the proceeds have not been
reinvested so this amount of the gain must remain chargeable. [1]

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