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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TAX RATES AND ALLOWANCES

Supplementary Instructions
1. Calculations and workings need only be made to the nearest £
2. All apportionments should be made to the nearest month.
3. All workings should be shown in Section C.

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SECTION A - ALL 15 questions are compulsory and MUST be attempted.

Each question is worth 2 marks.

Q1. During the tax year 2020/21, Sarah had taxable trading profits of £58,000.
What amount of class 4 national insurance is payable in 2020/21?
A £5,020
B £4,365
C £5,820
D £3,805
Q2..On 21 May 2020 Mr Clap sold 150 shares in Able plc for £28,000, resulting in a
capital gain of £11,500 after taking account of the annual exempt amount.
Mr Clap is an employee of Able plc and has an annual salary of £30,000 but he
owns less than 1% of the shares in Able plc.
What is his capital gains tax liability for 2020/21?
A £2,070
B £2,300
C £1,150
D £3,220
Q3. Ash and Clive have been trading in partnership for many years, sharing profits
in the ratio 2:1.
On 1 July 2020 they changed the partnership agreement so that Ash gets an
annual salary of £20,000 and the remaining profits are shared equally.
The partnership made adjusted trading profits of £240,000 in its year ended 31
December 2020
What is Ash’s share of profits for the year ended 31 December 2020?
A Ash £120,000
B Ash £160,000
C Ash £135,000
D Ash £145,000

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Q4. Fun Ltd has the following results for the year ended 31 March 2021
£
Taxable trading profits 550,000
Capital gain on sale of shares 80,000
Dividends received 20,000
What is the corporation tax payable by Fun Ltd for the year ended 31 March
2021?
A £123,500
B £126,000
C £104,500
D £119,700
Q5. Jon is employed on an annual salary of £25,000 and his employer has provided
him with a number of benefits during 2020/21.
Which ONE of the following benefits provided by his employer is taxable?
A A smart phone available for private use
B An interest-free loan of £11,000
C A car parking space at work
D Medical treatment costing £280 paid for by his employer to help Jon return to
work sooner.

Q6. Simon has been self-employed since 1990, making up his statements of profit
or loss to 30 September. Simon’s tax liabilities for the tax years 2019/20 and
2020/21 are as follows:
2019/20 2020/21
£ £
Income tax payable 4,100 5,730
Class 4 national insurance contributions 1,480 1,800
Capital gains tax 7,000 9,000

What is the balancing payment due on 31 January 2022?

A £10,950
B £3,950
C £7,530
D £14,715

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Q7. Frank is self-employed and employs his wife Georgia in the business. Georgia is
his only employee and is paid an annual salary of £20,000 and has taxable benefits
of £5,000.
How much employer’s national insurance is Frank responsible for paying in
2020/21 as a result of employing Georgia?
A £450
B £Nil
C £690
D £2,237
Q8.You are a trainee Chartered Certified Accountant and your firm has a client, Scott,
who has refused to disclose a chargeable gain to HM Revenue and Customs (HMRC).
From an ethical viewpoint, which of the following actions could be expected of
your firm?
(1) Report this to the firm’s money laundering reporting officer.
(2) Advise the client to make disclosure.
(3) Cease to act for the client.
(4) Inform HMRC of the non-disclosure.
(5) Warn the client that your firm will be reporting the non-disclosure.
(6) Notify HMRC that your firm has ceased to act for the client.
A 2, 3 and 5
B 1, 2, 3 and 6
C 2, 3 and 4
D 1, 4, 5 and 6
Q9. Huge Ltd is required to pay corporation tax by instalments. The company has
recently prepared a statement of profit or loss for the 10-month period ending 28
February 2021 and have calculated a corporation tax liability of £384,000.
What is the amount and due date of the final instalment payable by Huge Ltd in
respect of this period?
A £115,200 on 14 July 2021
B £38,400 on 14 June 2021
C £96,000 on 1 December 2021
D £104,727 on 30 November 2021

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Q10. On 14 November 2020, Sam made a gift to a trust of £780,000 (after
deducting all available exemptions). The trustees agreed to pay the inheritance tax
arising in respect of this gift. Sam has not made any other lifetime gifts.
What amount of lifetime inheritance tax would have been payable in respect of
Sam’s gift to the trust?
A £89,800
B £112,250
C £113,750
D £91,000
Q11. How long must a self-employed individual retain records used in preparing a
self-assessment tax return for the tax year 2020/21?
Business records Non-business records
A 31 January 2023 31 January 2023
B 31 January 2023 31 January 2027
C 31 January 2027 31 January 2027
D 31 January 2027 31 January 2023
Q12. J plc acquired 100% of the shares in D Ltd on 1 September 2020. J plc had
taxable total profits of £360,000 for the year ended 31 March 2021. D Ltd had an
adjusted trading loss of £240,000 for the year to 31 May 2021.
What is the maximum amount of loss that D Ltd can surrender to J Plc for the
year ended 31 March 2021?
A £140,000
B £240,000
C £120,000
D £210,000
Q13. Paul had been resident in the United Kingdom until 2019/20. However,
following his retirement, he decided to move overseas, purchasing an overseas
property on 6 April 2020.
Paul still has a house in the UK and stayed there during the 105 days he spent in the
UK during the tax year 2020/21.
Which of the following statements are correct in relation to Paul’s UK residence
for 2020/21?
A He is UK resident as he spent more than 16 days in the UK during 2020/21.
B He is not UK resident as he spent more than 90 days outside of the UK in
2020/21.
C He has two ties with the UK in 2020/21 and is therefore UK resident.
D He has one tie with the UK in 2020/21 and is therefore not UK resident.

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Q14. Joy held 100% of the ordinary share capital of Cloud Ltd before giving her
nephew 350 shares (a 20% holding) on 1 September 2020. Joy died on 14 March
2021.
Cloud Ltd – Value of an ordinary share:
As at 1 September 2020 14 March 2021
£ £
As part of a 100% holding 485 570
As part of a 80% holding 400 410
As part of a 20% holding 230 260
What is the value of the shares gifted on 1 September 2020 for inheritance tax
purposes?
A £80,500
B £169,750
C £288,750
D £91,000
Q15. Hope was provided with a company car by her employer. The company paid
£24,640 for the car in January 2020 after obtaining a discount. The list price £26,320.
The car emits 53 grams per kilometre of carbon dioxide, runs on diesel and does not
meet the requirements of RDE2.
What is the taxable benefit assessable on Hope for 2020/21 for the car?
A £3,421
B £4,474
C £5,264
D £4,928

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SECTION B - ALL 15 questions are compulsory and MUST be attempted.

Each question is worth 2 marks.
The following information should be used to answer questions 16-20

Barbara sold all of her capital assets during 2020/21 in preparation for her
emigration to Australia.
● Barbara sold her dog grooming business which she has run as a sole trader since
2010 for £300,000. The sale included the premises from which the business was run
for £225,000 (Barbara had purchased this for £125,000), the goodwill for £50,000
(Barbara had built this up since the business began) and some small items of
machinery and equipment and stock which had cost £10,000.
● Barbara sold her house on 31 March 2021 for £250,000, incurring legal and estate
agent fees of £5,000. She had originally purchased the house ten years ago.

During her period of ownership Barbara lived in the house for the first five years,
before moving in with her daughter for a year whilst recovering from an operation.
She moved back into the house for a short whilst but then left the house empty
when she went on a world cruise for six months. When she returned from the
cruise, she went to live with a friend and eventually sold the house on 31 March
2021.
Barbara had taxable income (after the deduction of personal allowances) for the
2020/21 tax year of £15,000.
Q16. What is the total capital gain on the sale of the business?
A £150,000
B £50,000
C £165,000
D £100,000
Q17. Which of the following statements is true about the sale of the house?
A Barbara cannot claim ANY PPR as she did not live in the house for the whole of her
period of ownership
B Barbara can claim PPR but only for the months when she was living in the house
C Barbara can claim PPR for the months when she was living in the house plus any
deemed occupation periods
D The whole of the gain is exempt due to the PPR available to Barbara

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Q18. What rate of tax would apply to the gain on the sale of the house assuming it
is not entirely relieved by PPR and/or the annual exemption?
A 10%
B 18%
C Partly 18% and partly 28%
D 28%

Q19. When must a claim for business asset disposal relief be made for 2020/21?
A The relief is automatic rather than claimed so there is no deadline
B 31 January 2023
C 31 January 2022
D 5 April 2025
Q20. On what date would Barbara pay her capital gains tax liability for 2020/21?
A 31 January 2022
B 31 January 2023
C Half on 31 January 2022 and the other half on 31 July 2022
D Half on 31 July 2022 and the other half on 31 January 2023

The following information should be used to answer questions 21-25

On 23 August 2015, Peter made a gift of a furnished house valued at £420,000 to

his son, Jack, as a wedding gift.
Peter died on 15 March 2021, at which time his estate was valued at £880,000.
Under the terms of his will, Peter divided his estate equally between his wife and
son. Peter had not made any gifts during his lifetime except for the gift of the house
to Jack. Peter’s estate does not include a residential property.
Q21. Which of the following statements is true?
A The transfer on 23 August 2015 is a CLT which is chargeable in lifetime and again
when Peter dies on 15 March 2021.
B The transfer on 23 August 2015 is a PET which is chargeable in lifetime and again
when Peter dies on 15 March 2021.
C The transfer on 23 August 2015 is a PET which is NOT chargeable in lifetime but
becomes chargeable when Peter dies on 15 March 2021.
D The transfer on 23 August 2015 is a CLT which is NOT chargeable in lifetime but
becomes chargeable when Peter dies on 15 March 2021.

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Q22. Which of the following exemptions would be available to set against the gift
of the house to Jack on 23 August 2015?
A The annual exemptions for 2014/15 and 2015/16 only
B A marriage exemption of £2,500 plus the annual exemptions for 2014/15 and
2015/16
C A marriage exemption of £5,000 plus the annual exemptions for 2014/15 and
2015/16
D A marriage exemption of £5,000 plus the annual exemption for 2015/16 only

Q23. What is the rate of taper relief that will apply to the transfer on 23 August
2015?
A 20%
B 40%
C 60%
D 80%
Q24. How much inheritance tax will be payable on the death estate of Peter?
A £88,000
B £176,000
C £352,000
D £222,222

Q25.Which of the following is true about the tax payable on the lifetime transfer
as a result of Peter’s death?
A Jack will pay the inheritance tax which is due on 30 September 2021
B The executors of the estate will pay the inheritance tax which is due on 15
September 2021
C Jack will pay the inheritance tax which is due on 15 September 2021
D The executors of the estate will pay the inheritance tax which is due on 30
September 2021

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The following information should be used to answer questions 26-30

P Ltd began trading on 1 January 2021. The sales and purchases for the first two
months were as follows:
January February
£ £
Outputs
Sales 13,200 18,800
Inputs
Goods purchased 94,600 193,100
Services incurred 22,300 32,700

The above figures are stated exclusive of value added tax (VAT).
On 1 March 2021 P Ltd realised that its sales for March 2021 alone were going to
exceed £100,000. On that date the company had an inventory of goods that had
cost £108,600 (exclusive of VAT).
Q26 When was P Ltd required to compulsorily register for VAT?
A 1 January 2021
B 1 February 2021
C 1 March 2021
D 1 April 2021
Q27. What is the deadline for notifying HM Revenue and Customs of the need to
register for VAT?
A 30 days from the date became aware of requirement
B One month and 7 days from the date became aware of requirement
C Next 31 January from the date became aware of requirement
D Next 31 October from the date became aware of requirement

Q28. How much input VAT will P Ltd be able to recover in respect of inputs
incurred prior to registering for VAT?
A £21,720
B £32,720
C £11,000
D £27,267

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Q29. The directors of P Ltd have budgeted capital expenditure in November 2021
of £30,000 to purchase a new car for the Finance Director and £120,000 to
purchase new machinery. Both figures are quoted inclusive of VAT where
appropriate.
How much VAT will P Ltd be able to recover on these purchases?
A £30,000
B £24,000
C £25,000
D £20,000
Q30. Which of the following statements would be true about the disclosure of a
VAT error?
A A correction can be made on the next VAT return provided the net errors total
more than the higher of £10,000 and 1% of the turnover for the VAT period.
B A disclosure must be made of any error to HM Revenue and Customs by way of a
simple letter or completion of an error declaration.
C A correction can be made on the next VAT return provided the net errors total
less than the higher of £10,000 and 1% of the turnover for the VAT period.
D A correction can be made on the next VAT return provided the net errors total
less than the lower of £10,000 and 1% of the turnover for the VAT period.

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Section C – All two questions are compulsory and MUST be attempted.

Q31 (a) Mary commenced in self-employment on 1 May 2019. She prepared her first
accounts for the 14-month period to 30 June 2020. The results for the first two
accounting periods before deducting capital allowances are as follows.
£
1 May 2019 to 30 June 2020 60,984
Year ended 30 June 2021 37,200
The only addition made by Mary was a motor car with CO2 emission of 105 grams
per kilometre which she purchased on 1 May 2020 for £10,400. The motor car
was used only for business use.
Mary’s business will continue for the foreseeable future.
Required:
Calculate the amount of trading profit that will be assessed on Mary for each of
the tax years 2019/20, 2020/21 and 2021/22.
Note: You should assume that the capital allowance rates for the tax year 2020/21
apply throughout. (4 marks)

(b) Opal Ltd has prepared accounts for the 14-month period ended 31 May 2021,
showing trading profit for the period of £434,000. This figure is before taking
account of capital allowances.
The tax written down value of Opal Ltd’s capital allowances main pool at 1 April 2020
was £62,000. On 10 April 2021, Opal Ltd purchased machinery for £38,200.
Required:
Calculate Opal Ltd’s taxable total profits for each of the accounting periods covered
by the 14-month period of account ended 31 May 2021.
Note: You should assume that the capital allowance rates and allowances for the
financial year 2020 apply throughout. (4 marks)

(C) John has provided the following information is available for the tax year 2020/21.

(1) He is employed by S plc as a sales director. During the tax year 2020/21, he was
paid gross director’s remuneration of £184,000.
(2) During the tax year 2020/21, John contributed £28,000 into S plc’s HM Revenue
and Customs’ registered occupational pension scheme. The company contributed a
further £8,000 on his behalf. Both John and S plc have made exactly the same
contributions for the previous five tax years.
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(3) During the period 6 April to 31 December 2020, John used his private motor car
for both private and business journeys. He was reimbursed by S plc at the rate of
60p per mile for the following mileage:
Miles
Normal daily travel between home and S plc’s offices 1,180
Travel between S plc’s offices and the premises of
S plc’s clients 4,270
Travel between home and the premises of S plc’s
clients (none of the client’s premises were located
near the offices of S plc) 510
_____
Total mileage reimbursed by S plc 5,960
_____
(4) During the period from 1 November 2020 to 5 April 2021, S plc provided John
with an hybrid car which has a list price of £86,940 and an official CO2 emission rate
of 45 grams per kilometre and an electric range of 29 miles. S plc also provided John
with fuel for both his business and private journeys.
(5) During 2019 S plc provided John with a loan which was used to purchase a
yacht. The amount of loan outstanding at 6 April 2020 was £84,000. John repaid
£12,000 of the loan on 31 July 2020, and then repaid a further £12,000 on 31
December 2020. He paid loan interest of £1,270 to S plc during the tax year
2020/21. The taxable benefit in respect of this loan is calculated using the average
method.
(6) During the tax year 2020/21, S Plc paid for John to join a golf club to meet
clients. The cost of the annual subscription is £1,400 per annum.
(7) During the tax year 2020/21, John made personal pension contributions up to
the maximum amount of available annual allowances, including any unused
amounts brought forward from previous years. These contributions were in
addition to the contributions he made to S plc’s occupational pension scheme (see
Note (2)). John has not made any personal pension contributions in previous tax
years.
(8) John owns a holiday cottage which is let out as a furnished holiday letting,
although the letting does not qualify as a trade under the furnished holiday letting
rules. The property business profit for the year ended 5 April 2021 was £6,730.
Required:
Calculate John‘s income tax liability for the tax year 2020/21.
(12 marks)

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Q32. (a) The summarised statement of profit or loss for the year ended 30 September
2020 of S Ltd is as follows:
Note £ £
Gross profit 384,550
Operating expenses
Depreciation 28,859
Repairs and renewals 1 28,190
Rent and business rates 2 45700
Other expenses 3 62,101
_______
(164,850)
_______
Operating profit 219,700
_______
Note 1 – Repairs and renewals
Repairs and renewals are as follows £
Re-painting the exterior of the company’s office building 8,390
Extending the office building to create a new reception area 19,800
______
28,190
______
Note 2 – Rent and business rates
Included in the rent and rates figure is £20,000 relating to a premium paid for a 10
year lease on a new office building. This premium was paid on 1 July 2020. The lease
is used for business purposes.
Note 3 – Other expenses
Other expenses are as follows: £
Entertaining UK customers 3,600
Entertaining overseas customers 1,840
Political donations 740
Donation to a charity where S Ltd received free advertising in the charity’s
newsletter. This was not a qualifying charitable donation 430
Gifts to customers (pens costing £30 each, not displaying S Ltd’s name) 660
Gifts to customers (clocks costing £65 each and displaying S Ltd’s name) 910
Balance of expenditure (all allowable) 53,921
_______
62,101
_______
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Note 4 – Plant and machinery

On 1 October 2019 the tax written down values of S Ltd’s plant and machinery were
as follows: £
Main pool 48,150
Special rate pool 9,200
The following motor cars were purchased during the year ended 30 September
2020:
Date of purchase Cost CO2 emission rate
£
Motor car (1) 10 November 2019 10,800 43 grams per kilometre
Motor car (2) 10 December 2019 20,400 105 grams per kilometre
The following motor cars were sold during the year ended 30 September 2019:
Date of sale Proceeds Original cost
££
Motor car (3) 8 March 2020 9,100 8,500
Motor car (4) 8 March 2020 12,400 18,900
The original cost of motor car (3) has previously been added to the main pool, and
the original cost of motor car (4) has previously been added to the special rate pool
Required:
Calculate S Ltd’s tax adjusted trading profit for the year ended 30 September 2020.
Note: Your computation should commence with the operating profit figure of
£219,700, and should also list all of the items referred to in Notes (1) and (2),
indicating by the use of zero (0) any items that do not require adjustment.
(12 marks)

(b) On 30 March 2021 S Ltd sold a storage warehouse for £125,000 which was
originally purchased on 10 October 2005 for £28,000.
A replacement storage warehouse was purchased on 1 September 2020 for
£117,500.
The relevant RPI factor is:
October 2005 - December 2017 0.476
Required:
Calculate the chargeable gain on the sale of the warehouse on 30 March 2021.
(4 marks)
Briefly explain, with supporting calculations, the deferral which can be claimed by
S Ltd as a result of the purchase made on 1 September 2021.
(4 marks)
(20 marks)
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