Faculty-wide Assessment (FWA)

ONLINE ASSESSMENT

Division Business Duration 120 minutes

Program Bachelor of Accounting

Course ACC 3013 Taxation

Instructions to Students
You should have:
 This question paper:
 Tax tables containing applicable tax rates and allowances: 7 pages

Academic Honesty Statement

In accordance with HCT policy LP201- Academic Honesty
• Students are required to refrain from all forms of academic dishonesty as defined
and explained in HCT procedures and directions from HCT personnel.
• A student found guilty of having committed acts of academic dishonesty may be
subject to one or more of the disciplinary measures as outlined in Article 33 of the
Student and Academic Regulations.
‫إفادة األمانة األكاديمية‬
‫ األمانة األكاديمية‬LP201 - ‫وفًقا لسياسة كليات التقنية العليا‬
‫ كما هو مبّين وموضح في السياسات واإلجراءات‬،‫• ُيطلب من الطلبة االمتناع عن كافة أشكال سوء األمانة األكاديمية‬
.‫ والتوجيهات الصادرة من موظفي الكليات‬،‫الخاصة بكليات التقنية العليا‬
‫• في حالة ارتكاب الطالب أي شكل من أشكال سوء األمانة األكاديمية سوف يتعرض الى واحد أو أكثر من التدابير‬
.‫ من األنظمة األكاديمية‬33 ‫التأديبية على النحو المبين في المادة‬
Signature: _____________________________________________

Student Name: _______________________________________________________

Student HCT ID: _______________________________________________________

Section No. ONE TWO Total %

Marks Allocated 20 80 100 100

Marks Obtained

SAMPLE FWA EXAM

SECTION ONE: MULTIPLE CHOICE (20 possible marks)

1. Most of the taxes in UK are _________.

A. direct taxes
B. indirect taxes
C. indirectly collected by the government
D. flat-rate taxes

2. Which of the following refers to past legal decisions written by the courts in the course
of deciding cases?
A. acts of Parliament
B. statutory Instruments
C. HMRC publications
D. case law

3. Which of the following is a case of tax evasion?

A. contributions to tax-free individual savings accounts (ISAs)
B. donating larger amounts to approved charities
C. making contributions to personal pension plans in excess of available allowances
D. none of the above

4. Vicky is visiting UK once every year since 2010 but has not been a UK resident in any of
the preceding tax years. In 2019, he arrives in the UK on 6 April and wishes to spend
maximum days but would not like to become UK resident for the tax year 2019/20. If
Vicky has no any UK ties, how long should he stay?
A. less than 46 days
B. less than 16 days
C. less than 90 days
D. less than 183 days

SAMPLE FWA EXAM

5. Rizwan makes a chargeable gain of £21,900 during the tax year 2019/20. This gain does
not qualify for entrepreneur’s relief. What is the amount of taxable gain for Rizwan for
the tax year 2019/20?
A. £21,900
B. £10,050
C. £10,200
D. £11,700

6. The latest filing date for a personal paper return for the tax year 2019/20 where notice
to file tax return issued by HM Revenue & Customs on 15 May 2020 is__________.
A. 15 May 2020
B. 31 October 2020
C. 31 December 2020
D. 31 January 2020

7. Which of the following is not likely to be used as a badge of trade?

A. length of ownership of goods
B. age of the taxpayer
C. intentions of the taxpayer
D. frequency of transactions

8. Hill View Limited published accounts for the year ended 31 March 2020 in April 2020
and filed tax return for the financial year 2019 in November 2020. If no any compliance
check enquiry related to FY 2019 is pending or expected, Hill View Limited must keep the
records up to__________.
A. 31 March 2026
B. 31 March 2021
C. 30 November 2026
D. 31 December 2020

SAMPLE FWA EXAM

9. Unless advised otherwise by HM Revenue & Customs, a VAT registered trader must keep
records for inspection for_________.
A. 6 years
B. 1 year
C. 3 years
D. 4 years

10. JP Mehra, a VAT registered trader, purchased a motor car in July 2019 for £20,000
excluding VAT. He could not recover VAT paid because the car is not wholly used for
business purposes. JP Mehra subsequently sold the car in February 2020 for £18,000
excluding any VAT. What is the output tax payable on this sale?
A. £3,600
B. £2,000
C. £4,000
D. £0

END OF SECTION ONE

SAMPLE FWA EXAM

SECTION TWO: CONSTRUCTED RESPONSE QUESTIONS (80 possible marks)

11. Perry works for Mahr Ltd. He also owns and runs a small trading business as a sole
trader. Following information relates to the tax year 2019/20:

£
Employment income (before deduction of PAYE tax) 75,000
Trading income (taxable) 33,500
Dividends 6,250
Building society interest 2,200
Qualifying interest paid 1,000
Contribution to personal pension plan (net) 6,500
Mahr Ltd. has deducted £28,000 PAYE tax from payments made to Perry. Perry has donated
£3,600 in gift aid to an approved local charity during the tax year 2019/20.
Required:
Assess the income tax liability of Perry for the tax year 2019/20.

SAMPLE FWA EXAM

11. Agha is a sole trader who has been in business for many years preparing accounts to 5
April each year. His recent results have been as follows:
Year ended 5 April 2019 profit £19,500
Year ended 5 April 2020 loss 31,900
Agha received dividend income of £6,300 and £4,900 in 2018/19 and 2019/20
respectively. Agha has no other income in 2019/20.
Required:
Assess taxable income for 2018/19 & 2019/20, and determine the amount of trading
loss to carry forward to the tax year 2020/21, if Agha wishes to claim loss relief against
general income of the current and preceding year (quickest claim).
(6 marks)

SAMPLE FWA EXAM

13. Peter and Noreen are running a partnership business since 2014 and prepare accounts
to 31 March each year. For the year ended 31 March 2020, taxable trading profits are
£90,000. Peter is allocated an annual salary of £10,000 and the remaining profits are
then shared between Peter and Noreen in the ratio of 1:2. However, on 31 May 2019
they agreed to new terms that allow annual salaries of £10,000 to each partner and
equal share of remaining profit or loss.
Required:
Assess taxable profits of each partner assuming none of the partners has any other
during the tax year 2019/20. (8 marks)

SAMPLE FWA EXAM

14. In February 2011, Patricia made a lifetime chargeable transfer of £229,000. On 10
January 2020, she makes a gift of £430,000 to a trust. The trustees agree to pay the
inheritance tax due.
Required:
Assess inheritance tax liability of the trustees (donee) on the gift made in January 2020.
(8 marks)

SAMPLE FWA EXAM

15. Ravi Ryan Ltd manufactures chemicals for use in textile industries. Ravi Ryan Ltd is a UK
resident company and prepares accounts to 31 March every year. The company’s
statement of profit or loss for the year ended 31 March 2020 is as follows:

Notes £ £

Gross profit 1,222,000

Other income

Dividends income 1 30,000

Profit on sale of business premises 2 54,800

Property rental income 3 15,000

Bank interest 4 18,320

118,120

Expenses

Impaired debt (all trade) 8,500

Depreciation 191,600

Professional fees 5 42,000

Repairs and renewals 6 128,000

Other expenses 7 72,000

(442,100)

Interest payable 8 (41,900)

Profit before taxation 856,120

Notes:

1) Dividends income of £30,000 was received from a UK company.

2) Profit on sale of business premises

SAMPLE FWA EXAM

 Business premises were sold on 15 October 2019 for £590,000. The chargeable gain
on sale has been computed to £49,800.
3) Property rental income was received during the year in respect of a commercial
property held as an investment and is let out to an unconnected company. Rental
amount received covers the rental period from 1 April 2019 to 31 March 2020.
4) Bank interest received
The bank interest is the amount accrued to 31 March 2020 on deposits not held for
trading purposes.
5) Professional fees are as follows:
Legal fees in connection with the issue of loan notes (N.8) £9,700
Legal fees in connection with fine for breach of health and safety rules 2,100
Accountancy and audit fee 15,400
Legal fees in connection with the issue of share capital 14,800
42,000
6) Repairs and Renewals
Repairs and renewals includes £90,700 for constructing an extension to the
company’s manufacturing premises and £37,300 for repainting interior of the
company’s headquarter.
7) Other expenses
Other expenses include:
Charitable donation to a qualifying local charity £8,000
Entertaining customers 3,200
8) Interest payable
A note was issued on 1 August 2019, proceeds of which was used for trading
purposes. Interest amount given in the profit statement was paid on 31 March 2020
and is the amount accrued to that date.
9) Capital allowances on plant and machinery
The tax written down value of main pool at 1 April 2019 was £1,118,750.
In the year to 31 March 2019, following assets were purchased:

1 June 2019 Machinery £130,000

SAMPLE FWA EXAM

 12 November 2019 Van 17,500
Company disposed of plant on 15 December 2019 for £12,000 (original cost
£16,000).
Required:
a. Assess Ravi Ryan’s tax adjusted trading profits for the year ended 31 March 2020.
Start with the profit before taxation of £856,120 and list all of the items in the
statement of profit and loss indicating by the use of a zero (0) any items that do not
require adjustment. Assume that the company claims maximum available capital
allowances. (16 marks)
b. Assess Ravi Ryan Ltd’s taxable total profits for the year ended 31 March 2020.
(5
marks)
c. Assess the corporation tax liability of Ravi Ryan for the year ended 31 March 2020.
(2
marks)

SAMPLE FWA EXAM

16. Hariby Ltd has provided the following information for the quarter to 31 March 2020:
1) Sales consisted of £45,000 standard rated sales and £15,000 zero rated sales.
2) Purchases of trade goods were all standard rated and totaled £31,000.
3) Standard rated expenses were £7,600, including £350 for entertaining UK customers.
4) Goods costing £250 were taken out of inventory for private use. The replacement
cost of goods was £300.
5) A photocopier (for use in office) costing £6,400 was purchased.
All figures exclude VAT.
Required:
Assess the VAT liability of Hairby Ltd for the quarter ended 31 March 2020.
(15 marks)

SAMPLE FWA EXAM