Acca Exam Kit (2024-2025)

ACCA
Strategic Professional
– Options
Advanced Taxation
(ATX-UK)
(Finance Act 2023)
EXAM KIT
For June 2024 to March 2025 examination sittings
A T X –U K : A DVA NCED TAXA TION (FA202 3)
British Library Cataloguing-in-Publication Data

A catalogue record for this book is available from the British Library.
Published by:
Kaplan Publishing UK
Unit 2 The Business Centre
Molly Millar’s Lane
Wokingham
Berkshire
RG41 2QZ
ISBN: 978-1-83996-398-8
© Kaplan Financial Limited, 2023

Printed and bound in Great Britain.
The text in this material and any others made available by any Kaplan Group company does not
amount to advice on a particular matter and should not be taken as such. No reliance should be
placed on the content as the basis for any investment or other decision or in connection with any
advice given to third parties. Please consult your appropriate professional adviser as necessary.
Kaplan Publishing Limited and all other Kaplan group companies expressly disclaim all liability to
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consequential or otherwise arising in relation to the use of such materials.
All rights reserved. No part of this examination may be reproduced or transmitted in any form or
by any means, electronic or mechanical, including photocopying, recording, or by any information
storage and retrieval system, without prior permission from Kaplan Publishing.
Acknowledgements
The past ACCA examination questions are the copyright of the Association of Chartered Certified
Accountants. The original answers to the questions from June 1994 onwards were produced by the
ACCA and have been adapted by Kaplan Publishing.
P.2 K A P LA N P UB L I S H I N G
CONTENTS
Page
Index to questions and answers P.5
Analysis of past exams P.12
Exam technique P.14
Exam specific information P.16
Kaplan’s recommended revision approach P.22
Kaplan’s detailed revision plan P.27
Tax rates and allowances P.38
Time limits and election dates P.43
Section
1 Practice questions – Section A 1
2 Practice questions – Section B 81
3 Answers to practice questions – Section A 165
4 Answers to practice questions – Section B 407
5 Specimen exam questions 681
6 Answers to specimen exam 691
Versions of some questions in this Exam Kit may also be available on the ACCA Practice Platform on
the ACCA website. They are a very useful reference, in particular to attempt using ACCA’s exam
software. However, you should be aware that ACCA will decide when those questions will be
amended for syllabus changes or replaced, so they may differ slightly from the versions in this
Exam Kit.
K APLAN P UBLI S H I N G P.3

Key features in this edition
In addition to providing a wide-ranging bank of real past exam questions, we have also included
in this edition:
• An analysis of all of the recently published examination questions.
• Exam specific information and advice on exam technique.
• Our recommended approach to make your revision for this particular subject as effective
as possible.
This includes step by step guidance on how best to use our Kaplan material (study text,
pocket notes and exam kit) at this stage in your studies.
• An increased number of enhanced tutorial answers packed with specific key answer tips,
technical tutorial notes and exam technique tips from our experienced tutors.
• Complementary online resources including full tutor debriefs and question assistance to
point you in the right direction when you get stuck.
You will find a wealth of other resources to help you with your studies on the following sites:
www.mykaplan.co.uk
www.accaglobal.com/gb/en/student.html
Quality and accuracy are of the utmost importance to us so if you spot an error in any of our
products, please send an email to mykaplanreporting@kaplan.com with full details, or follow the
link to the feedback form in MyKaplan.
Our Quality Co-ordinator will work with our technical team to verify the error and take action to
ensure it is corrected in future editions.
INDEX TO QUESTIONS AND ANSWERS
INTRODUCTION
The style of the ATX exam questions has changed over the years and significant changes have had
to be made to questions in light of the legislative changes in recent Finance Acts.
Accordingly, many of the old ACCA questions within this kit have been adapted to reflect the new
style of exam and the new rules. Therefore, some questions may not be worth 50 or 25 marks. If
changed in any way from the original version, this is indicated in the end column of the index below
with the mark (A).
Also included are the marking schemes for past ACCA real examination questions to assist you in
understanding where marks are earned and the amount of time to spend on particular tasks. Note
that if a question has been changed from the original version, it will have also been necessary to
change the original ACCA marking scheme. Therefore, if a question is marked as adapted (A) you
should assume that this also applies to the marking scheme.
Note that the majority of the questions within the kit are past ACCA exam questions, the more
recent questions are labelled as such in the index.
KEY TO THE INDEX
ANSWER ENHANCEMENTS
We have added the following enhancements to the answers in this exam kit:
Key answer tips
All answers include key answer tips to help your understanding of each question.
Tutorial note
All answers include more tutorial notes to explain some of the technical points in more detail.
Tutor’s top tips
For selected questions, we ‘walk through the answer’ giving guidance on how to approach the
questions with helpful ‘tips from a top tutor’, together with technical tutor notes.
These answers are indicated with the ‘footsteps’ icon in the index.
KAPLAN P UBLI S H I N G P.5

ONLINE ENHANCEMENTS
Answer debrief
For selected questions, we recommend that they are to be completed in full exam conditions
(i.e. properly timed in a closed book environment).
In addition to the examining team’s technical answer, enhanced with key answer tips and tutorial
notes in this exam kit, online you can find an answer debrief by a top tutor that:
• works through the question in full
• explains key elements of the answer
• ensures that the easy marks are obtained as quickly as possible.
These questions are indicated with the ‘video’ icon in the index.
Answer debriefs will be available on MyKaplan at:
www.mykaplan.co.uk
INDEX TO QUES TIO NS AND ANSWE RS
SECTION A QUESTIONS
TAXATION OF INDIVIDUALS
Page number
Past exam
Question Answer (Adapted)
Jun 13 and
1 Gail and Brad 1 165
Mar/Jun 16 (A)
2 Ziti 6 177 Jun 14 (A)
3 Jonny 9 193 Sept/Dec 15 (A)
4 Ray, Shanira and Kelly 12 202 Mar/Jun 16 (A)
5 Pippin 16 214 Mar/Jun 17 (A)
6 Maia 19 225 Mar/Jun 19 (A)
7 Joe and Fiona 23 234 Mar/Jun 21 (A)
8 Olma and Hogan 27 245 Mar/Jun 22 (A)
9 Hiromi 30 256 Mar/Jun 23 (A)

TAXATION OF CORPORATE BUSINESSES

Page number
Past exam
Drench, Paprikash, Hail Ltd Jun 10 and

10 34 266
and Rain Ltd Dec 11 (A)
Dec 10 and
11 Dilip Group and Emma 38 282
Sept/Dec 19 (A)
12 Janus plc Group 41 297 Jun 12 (A)
13 Sprint Ltd and Iron Ltd 45 309 Sept/Dec 15 (A)
14 Hahn Ltd Group 48 319 Sept/Dec 16 (A)
Sept/Dec 16 and
15 Waverley and Set Ltd Group 52 329
Mar/Jun 18 (A)
Mar/Jun 17 and
16 Heyer Ltd Group and Dee 56 339
Sept 18 (A)
Mar/Jun 18 and
17 Mita and Snowdon 61 350
Mar 20 (A)
18 Grand Ltd Group 65 359 Sept 18 (A)
19 Plad Ltd and Quil Ltd 69 372 Mar/Jun 19 (A)
20 Jeg Ltd Group 74 382 Sept/Dec 21 (A)
21 Hum Ltd Group 77 397 Sept/Dec 22 (A)
SECTION B QUESTIONS
Page number
Past exam
Employment
22 Morice and Babeen plc 81 407 Dec 11 (A)
23 Hyssop Ltd 83 414 Sept/Dec 15 (A)
24 Methley Ltd 84 421 Sept/Dec 16 (A)
25 Damiana plc 86 426 Sept/Dec 17 (A)
26 Demeter 88 431 Dec 18 (A)
27 Yacon Ltd and Daikon 90 435 Mar/Jun 21 (A)

Unincorporated businesses
28 Amy and Bex 92 439 Mar/Jun 16 (A)
29 Meg and Laurie 93 444 Sept/Dec 17 (A)
30 Rod 95 449 Mar/Jun 19 (A)
31 Tomas and Ines 97 453 Mar 20 (A)
32 Yaqui 98 457 Sept/Dec 22 (A)
Changing business scenarios
33 Desiree 100 463 Jun 10 (A)
34 Enid 102 468 Sept 18 (A)

35 Rosa 104 473 Sept/Dec 19 (A)
36 Sabin and Patan Ltd 106 477 Sept/Dec 21 (A)
K A P LA N P UB L I S H I N G P.9
Page number
Past exam
Capital taxes
37 Joan Ark 107 483

38 Alex 109 490 Pilot 05 (A)
39 Kepler 110 496 Jun 08 (A)
40 Ash 112 501 Dec 12 (A)
41 Pescara 114 507 Dec 13 (A)
42 Cada 115 515 Dec 14 (A)
43 Eric 117 521 Mar/Jun 16 (A)
44 Liber 119 527 Dec 18 (A)
45 Anya 120 533 Mar/Jun 23
Multi tax personal including overseas
46 Mirtoon 122 540 Dec 11 (A)
47 Shuttelle 124 548 Jun 13 (A)
Dec 14 and
48 Juanita and Buraco 125 555
Sept/Dec 16 (A)
49 Cate and Ravi 127 560 Jun 15 (A)
50 Max 129 566 Mar/Jun 18 (A)
51 Caden and Amahle 130 571 Sept/Dec 21 (A)
Personal finance, business finance and investments
52 Monisha and Horner 132 577 Dec 13 (A)
53 Stella and Maris 134 584 Sept/Dec 15 (A)
54 Jessica 135 589 Mar/Jun 18 (A)
55 Pedro 137 594 Mar 20 (A)

56 Luis 138 598 Mar/Jun 22 (A)
TAXATION OF CORPORATE BUSINESSES

Page number
Past exam
Family company issues
57 Nocturne Ltd 140 604 Jun 15 (A)
58 Maria and Granada Ltd 141 610 Mar/Jun 16 (A)
59 Acryl Ltd and Cresco Ltd 143 616 Sept/Dec 16 (A)
60 Traiste Ltd 145 621 Mar/Jun 17 (A)
61 Dent Ltd 147 627 Mar/Jun 19 (A)
62 Samphire Ltd and Kelp Ltd 149 631 Mar/Jun 21 (A)

63 Tula 150 638 Sept/Dec 22 (A)
Groups, consortia and overseas company aspects
64 Liza 153 642 Jun 13 (A)
65 Spetz Ltd Group 154 648 Dec 13 (A)
66 Klubb plc 156 654 Dec 14 (A)
67 Achiote Ltd 158 659 Mar/Jun 17 (A)
68 Kitz Ltd 159 665 Sept/Dec 19 (A)

69 Fox Ltd 161 669 Mar/Jun 22 (A)
70 Evora Ltd 163 674 Mar/Jun 23
ANALYSIS OF PAST EXAMS
The table below summarises the key topics that have been tested in recent examinations.
Key:
Q The question references are to the number of the question in this edition of the exam kit.
 Refers to questions which have not been included in the kit due to similarity to other recent
questions.
Sept/Dec Mar/Jun Sep/Dec Mar/Jun Sep/Dec Mar/Jun
2020 2021 2021 2022 2022 2023
IHT
Lifetime gifts  Q7  Q8, Q56 Q63
Death estate
Diminution in value Q63
BPR/APR  Q63 Q45
Gift with reservation Q27
Quick succession relief
Consequences of lifetime giving Q7 Q45
Overseas aspects  Q7 Q8
Trusts 
CGT
Basic computations Q51  Q9, Q45
Leases Q62 Q69
Shares 
Reorganisations
Capital gains tax reliefs:
Incorporation relief  Q9
Rollover relief  Q20 Q21, Q32
BADR Q36 Q32
Gift holdover relief  Q45
PRR/letting relief Q27
Planning
Overseas aspects  Q7  
Income Tax
Personal tax computations Q7 Q20  Q63 Q45
Redundancy payments
Share options and share Q27 Q8
incentives
Employment benefits  Q62 Q20
Employed v self employed
Property business profits
Overseas aspects of income  Q7 , Q51 
NICs  Q62 Q20
ANA L YS IS OF PA S T EXAMS
Sept/Dec Mar/Jun Sep/Dec Mar/Jun Sep/Dec Mar/Jun

2020 2021 2021 2022 2022 2023
Self-employed Income
− Capital allowances Q7 Q32
− Trading losses  Q36 Q8 Q9
− Partnerships
Badges of trade
Self-assessment Q9
Employee v partner
Corporation Tax
Anti-avoidance − trading losses
Loss relief Q69
Loan relationships
Research and development Q36
Intangible assets Q7 Q70
Transfer pricing Q20
Close companies  Q62 Q32
Purchase of own shares Q8
Personal service company Q51
Groups Q20 Q69 Q21
Consortium relief 
Capital gains implications Q62 Q20 Q69 Q21
including rollover
Pre-entry cap loss
Substantial shareholding
exemption
Overseas Aspects  Q20 Q21 Q70
Extraction of profits Q9
(salary vs. dividend)
Liquidation Q7
Administration 
Sole trade v company
Financial planning
Investments Q56
Pensions
EIS/SEIS/VCT Q56
Stamp Duty/SDLT Q21
VAT
Registration/deregistration  Q8
Schemes
Partial exemption
Capital goods scheme
Groups Q20
Land and buildings  Q7 Q21, Q32
Transfer of going concern
Overseas aspects Q20 Q70
Ethical issues  Q7 Q8 Q21 Q9

EXAM TECHNIQUE
In addition to reading the tips contained here, we recommend that you review the resources
available on the ACCA Global Website before sitting the CBE. Here you will find guidance
documents, videos and a link to the CBE question practice platform.
• Before the exam starts you will be given ten minutes to read the introductory page and the
four pages of instructions. These will be the same for each ATX exam and therefore it is
important that you familiarise yourself with these (using the ACCA practice exams) during
your revision. The exam time (3 hours and 15 minutes) will start automatically at the end of
the 10 minutes or earlier if actioned by you.
• We recommend that you spend 15 minutes reading the questions at the beginning of the exam:
– read the questions and examination requirements carefully, and
– begin planning your answers.
See the Exam Specific Information for advice on how to use this time for this exam.
• If 15 minutes are spent reading the exam, this leaves three hours to attempt the questions.
• There are 80 technical marks and 20 professional skills marks. Importantly, professional skills
marks should be achieved as you work through the technical marks.
• Divide the time you spend on questions in proportion to the marks on offer:
– one suggestion for this examination is to allocate 2.25 minutes to each mark available
(180 minutes/80 marks). This gives 90 minutes for section A and 45 minutes for each
section B question.
– within that, try to allow time at the end of each question to review your answer and
address any obvious issues.
– if you plan to spend more or less time than 15 minutes reading the exam, your time
allocation per mark will be different.
Whatever happens, always keep your eye on the clock and do not over run on any part of any
question!
• Planning your answers:
When the exam starts spend a few minutes skimming through each question to get a feel for
what is included. Within the background information for each question you will find brief
summary bullet points outlining the topics covered, which will help you identify what is being
tested. Once you have done this carry out an initial review of Section A. This will include a
number of exhibits breaking down the scenario into relevant sections and including the
detailed requirement. It will also include a list of the summarised requirements and an
option to complete your answer in a word processing document and/or a spreadsheet
document.
• You can move around and resize the windows that you open to lay the screen out in a format
that suits you.
• Now copy and paste the specifics of the requirement into your answer document, perhaps
highlighting in bold the different parts of the requirement and the verb used. Once complete
review the exhibits in detail, highlighting and making notes as you do so (see detail later) and
copy and pasting any relevant information to your answer document. These steps will help
with your planning and structure but will also enable you to minimise the number of windows
you have open.
The procedure will be similar for Section B.
EXAM SPECIFIC INFORMA TION
• Written questions:
Your answer should have a clear structure, using headings and subheadings.
Be concise. It is better to write a little about a lot of different points than a great deal about one
or two points.
For answers that are mostly written you may find the word processor most useful.
• If you get completely stuck with a question:
– make a note of the question, and
– return to it later.
• A date assumption will be given at the start of each question, and at the start of the requirements.
You should pay careful attention to this date and the timing of events noted in the scenario in
relation to it. Some events may have already happened, whereas others may be planned for the
future. For events which have already occurred reliefs may still be able to be claimed, but you
need to consider if the relevant claim date has already passed. For future events there could be
tax planning implications that could be discussed.
• Stick to the question and tailor your answer to what you are asked.
– Pay particular attention to the verbs in the question.
– Try to apply your comments to the scenario where possible.
• If you do not understand what a question is asking, state your assumptions.
Even if you do not answer in precisely the way the examining team hoped, you should be given
some credit, if your assumptions are reasonable.
• You should do everything you can to make things easy for the marker.
Make sure your answers use headings so it is easy for the marker to follow what you’re doing.
• Computations:
It is essential to include all your workings in your answers and ensure that they are clearly labelled.
Although computations may be prepared using standard formats, you should always think about
whether there is an easier way to arrive at the answer by working in the margin, say.
You may find the spreadsheet function most useful for detailed computations. Although markers
can see any formulae used, it is always clearer to show your working as well.
• Reports, memos and other documents:
Some questions ask you to present your answer in the form of a report, a memo, a letter or other
document.
Make sure that you use the correct format – there could be easy marks to gain here.
In the Section A question you may be asked to prepare multiple documents, e.g. a report and
paragraphs to be included in a letter.
• Scratch pad:
You will be able to make notes in the scratch pad to help with your planning. Please be aware
that anything in the scratch pad will not be seen by the marker, and will therefore not score any
marks. If you are sitting your exam via remote invigilation then you will not be permitted to use
scrap paper, so the scratch pad will be the only way to carry out your planning. The scratch pad
is available in the ACCA Practice Platform for you to practise using.
• Checking:
Leave enough time to read through the answers, ensuring they are clear and organised, and to
make any necessary changes.

EXAM SPECIFIC INFORMATION
THE EXAM
FORMAT OF THE EXAM
Total Technical Professional

marks marks skills marks
Section A: One compulsory question 50 40 10
There will be five marks on ethics in
this question
Section B: Two compulsory questions 50 40 10
(25 per question) (20 per question) (5 per question)
Overall 100 80 20
Total time allowed: 3 hours and 15 minutes.
Note that:
• The exam will be a computer-based examination (CBE).
• Candidates will be expected to undertake both calculation and narrative work. The questions
will be scenario based and may involve consideration of more than one tax, some elements
of planning and the interaction of taxes.
• Every ATX exam will include an ethical component for five marks in section A. The questions
on ethics will be confined to the following areas:
– prospective clients
– conflicts of interest
– disclosure of information to HM Revenue & Customs
– money laundering
– tax irregularities
– tax avoidance
– tax evasion.
• Apart from the above, any subject may be tested anywhere in the exam for any number of
marks.
• The exam will not just test ATX knowledge: TX knowledge is still highly examinable, but will
be tested in a more advanced way.
Remote invigilated exams

In certain geographical areas it may be possible for you to take your exam remotely. This option,
which is subject to strict conditions, can offer increased flexibility and convenience under certain
circumstances . Further guidance, including the detailed requirements and conditions for taking
the exam by this method, is contained on ACCA’s website at:
https://www.accaglobal.com/gb/en/student/exam-entry-and-administration/about-our-
exams/remote-exams.html.
PASS MARK
The pass mark for all ACCA Qualification examinations is 50%.

PROFESSIONAL SKILLS MARKS

The ATX examination contains 20 professional skills marks which test 4 different professional skills.
All four professional skills will be tested in Section A with communication only being tested in
Section A. Details of the professional skills are set out below.
Each professional skill included in the mark scheme will either be worth one or two marks. There
are no half marks for professional skills.
Communication
Section A questions will require you to respond in a particular format, or possibly more than one
format, e.g. a report and paragraphs for inclusion in a letter.
Your tone and presentation should be professional and should be easy to follow. Ensure you include
headings and subheadings to make sure you have covered all areas of the requirements in an
organised manner.
It is important to ensure that your response is relevant to the requirement and adheres to any
specific instructions given in the scenario. Make sure that the response is specific and not general.
When answering you should give thought to the response method you use, i.e. word processor
versus spreadsheet. Where completing both written and numerical elements you should ensure
that the two are clearly referenced between one another.
It is also important that you attempt all requirements in the question, so make sure you allocate
time between the different requirements.
Analysis and evaluation
In order to score marks for this skill you need to be able to apply the tax rules to the facts of the
scenario. You should expect to be asked to explain the consequences of one or more courses of
action, and recommend or advise on the best approach.
Where applicable, you should give consideration to the impact of any variables in a scenario, e.g.
different disposal dates. Any variables should be identified and the differences between them
clearly explained in your analysis.
Scepticism
Demonstrating scepticism does not mean challenging every fact or figure presented in a scenario.
Scepticism will be relevant where it is clear that there is uncertainty in the information, or there is
information missing, e.g. it is not clear whether an individual has an annual exempt amount
available.
Scepticism could also be demonstrated by challenging the views of others with regards to a
particular course of action or opinion. The question will make it clear where challenges are
expected, and you should ensure that you fully explain and justify any challenges that you make.
Commercial acumen
In order to demonstrate commercial acumen you need to be aware what advice is appropriate in
given circumstances. You will be dealing with individuals and organisations with very different
circumstances. Therefore, you should tailor your approach depending on the scenario and
recommend courses of action that are plausible and appropriate in the circumstances.
Demonstrating commercial acumen does not mean having knowledge of tax issues beyond the
scope of the syllabus. In order to demonstrate the skill you must use information within the
question scenario to provide realistic and commercial solutions to problems.
It is important to take a forward-looking approach. So you should be aware of the implications a

particular course of action may have in the future in order to make the right choices. This also
includes being aware of time limits for claims, so that you are aware of what options are available
in the given timeframe.
Commercial acumen can also be demonstrated by having a wider understanding of the purpose
behind certain rules, e.g. anti-avoidance legislation.
SUGGESTED APPROACH TO THIS EXAM

The ATX examination will be 3 hours and 15 minutes long, with no separate time allocated for
reading and planning. However, reading and planning are crucial elements of your examination
technique and it is important that you allocate time in the examination to this.
Spend time reading the examination questions carefully. As stated earlier, we recommend that
15 minutes should be spent reading the questions.
There is no choice of questions in the exam, but there is a decision to be made regarding the order
in which you should attempt the questions.
Therefore, in relation to ATX, we recommend that you take the following approach with your
reading and planning:
• Skim through the whole exam, assessing the level of difficulty of each question.
• Note in the scratch pad the amount of time you should spend on each part. Do this for each
part of every question.
• Decide the order in which you think you will attempt each question:
This is a personal choice and you have time on the revision phase to try out different
approaches, for example, if you sit mock exams.
A common approach is to tackle the question you think is the easiest and you are most
comfortable with first.
Others may prefer to tackle the longest question first, or conversely leave it till last.
Psychologists believe that you usually perform at your best on the second and third question
you attempt, once you have settled into the exam, so not tackling the bigger Section A
question first may be advisable.
It is usual however that students tackle their least favourite topic and/or the most difficult
question in their opinion last.
Whatever your approach, you must make sure that you leave enough time to attempt all
questions fully and be very strict with yourself in timing each question.

• For each question in turn, read the requirements and then the detail of the question
carefully.
Always read the requirement first as this enables you to focus on the detail of the question
with the specific task in mind.
Pay close attention to the verb in the requirement as this will tell you what kind of answer
you need to produce.
If the verb is ‘calculate’ then you will just need to produce calculations, and these may be
best prepared in the spreadsheet answer space. Sometimes you will be asked for calculations
with supporting explanations, so ensure you include these explanations as it may not be
possible to pass the requirement without them.
If the verb is ‘explain’ or ‘discuss’ then you only need a written answer. When explaining,
always try to ensure that you identify the issue, explain why it is relevant and then what it
means. For example, ‘The substantial shareholding exemption applies to the disposal of
shares because X Ltd has owned at least 10% of Y Ltd (a trading company) for at least 12
months out of the previous six years. Therefore, the gain on the disposal of the shares will be
exempt from corporation tax.’ Sometimes you may be asked to provide supporting
calculations with your explanations. If this is the case, then include them where appropriate
(e.g. to calculate a gain on a disposal you discussed) but remember that words should still be
the main focus of your answer.
Some questions will ask you to prepare a ‘summary’, which could be in reference to either
calculations or written elements. Where it is written elements then keep these brief.
Where the verb is ‘state’ or ‘identify’ then you can just list the relevant points without
providing a supporting explanation. Do ensure you read the full requirement though, as
sometimes this verb will be accompanied with ‘explain’, in which case see above.
‘Evaluate’, ‘recommend’, ‘advise’ or ‘conclude’ means you need to compare two or more
options and then decide what the best option is. You will probably have been given an
indication in the scenario of what is most important to the client, e.g. which option creates
the most after-tax cash, so this will help you to decide which option to choose. When asked
to evaluate it is always important that you do so as there will always be marks for a reasoned
recommendation, even if it does not match what is in the model answer.
For computational questions:
Highlight key numbers/information and key words in the question, or use the scratch pad or
answer space to make notes to yourself to remember key points in your answer. Remember
that any notes made in the scratch pad will not be seen by the marker and so will not score
marks.
For written questions:
Take notice of the format required (e.g. letter, memo, notes) and identify the recipient of the
answer. You need to do this to judge the level of sophistication required in your answer and
whether the use of a formal reply or informal bullet points would be satisfactory.
Plan your beginning, middle and end and the key areas to be addressed and your use of titles
and sub-titles to enhance your answer.
For all questions:

Spot the easy marks to be gained in a question and parts which can be performed
independently of the rest of the question. For example, tax payment dates, ethical issues,
laying out the answer in the correct format etc.
Make sure that you do these parts first when you tackle the question.
Don’t go overboard in terms of planning time on any one question – you need a good
measure of the whole exam and a plan for all of the questions at the end of the 15 minutes.
By covering all questions, you can often help yourself as you may find that facts in one
question may remind you of things you should put into your answer relating to a different
question.
Copy the requirements into the answer space so that you ensure you answer all parts.
• With your plan of attack in mind, start answering your chosen question with your plan to
hand, as soon as you are ready to start.
Always keep your eye on the clock and do not over run on any part of any question!
DETAILED SYLLABUS
The detailed syllabus and study guide written by the ACCA can be found at:
www.accaglobal.com/gb/en/student.html

KAPLAN’S RECOMMENDED REVISION
APPROACH
QUESTION PRACTICE IS THE KEY TO SUCCESS

Success in professional examinations relies upon you acquiring a firm grasp of the required
knowledge at the tuition phase. In order to be able to do the questions, knowledge is essential.
However, the difference between success and failure often hinges on your exam technique on the
day and making the most of the revision phase of your studies.
The Kaplan study text is the starting point, designed to provide the underpinning knowledge to
tackle all questions. However, in the revision phase, poring over text books is not the answer.
Kaplan online knowledge checks help you consolidate your knowledge and understanding and are
a useful tool to check whether you can remember key topic areas.
Kaplan pocket notes are designed to help you quickly revise a topic area, however you then need
to practise questions. There is a need to progress to full exam standard questions as soon as
possible, and to tie your exam technique and technical knowledge together.
The importance of question practice cannot be over-emphasised.
The recommended approach below is designed by expert tutors in the field, in conjunction with
their knowledge of the examining team and their recent real exams.
The approach taken for the applied skills level exams is to revise by topic area. However, with the
strategic professional exams, a multi topic approach is required to answer the scenario-based
questions.
It is very important that you familiarise yourself with the layout and functionality of the exam. You
can do this by practising past exam questions which have been released in the ACCA practice
platform. This enables you to attempt the questions in the real exam format and then self-mark
them using detailed marking guides. More information on the practice platform and how to access
it can be found at the following link:
https://www.accaglobal.com/gb/en/student/exam-support-resources/professional-exams-study-
resources/cbe-platform-support.html
You can also find practice questions on the ACCA Study Hub. Many of these questions feature in
our exam kit, but may have been updated by ACCA in different ways so you should not aim to
compare the two.
You need to practise as many questions as possible in the time you have left.
KA PLAN’ S RE COMMENDED REV IS ION APPROA CH
OUR AIM
Our aim is to get you to the stage where you can attempt exam standard questions confidently, to
time, in a closed book environment, with no supplementary help (i.e. to simulate the real
examination experience).
Practising your exam technique on real past examination questions, in timed conditions, is also
vitally important for you to assess your progress and identify areas of weakness that may need
more attention in the final run up to the examination.
In order to achieve this, we recognise that initially you may feel the need to practise some questions
with open book help and exceed the required time.
The approach below shows you which questions you should use to build up to coping with exam
standard question practice, and references to the sources of information available should you need
to revisit a topic area in more detail.
Remember that in the real examination, all you have to do is:
• attempt all questions required by the exam
• only spend the allotted time on each question, and
• get them at least 50% right!
Try and practise this approach on every question you attempt from now to the real exam.
EXAMINER COMMENTS
We have included the examiner’s comments to the specific new syllabus examination questions in
this kit for you to see the main pitfalls that students fall into with regard to technical content.
However, too many times in the general section of the report, the examiner comments that
students had failed due to:
• ‘misallocation of time’
• ‘running out of time’ and
• showing signs of ‘spending too much time on an earlier question and clearly rushing the
answer to a subsequent question’.
Good exam technique is vital.

STRATEGIC PROFESSIONAL CBE

We advise consulting the ACCA Global website for additional CBE revision resources. On the ACCA
website there is a CBE demonstration. It is ESSENTIAL that you attempt this before your real CBE.
You will become familiar with how to move around the CBE screens and the way that questions are
formatted, increasing your confidence and speed in the actual exam.
Be sure you understand how to use the software before you start the exam. If in doubt, ask the
assessment centre staff to explain it to you.
Questions are displayed on the screen and answers are entered using keyboard and mouse.
For additional support with your studies please also refer to the ACCA Global website.
THE KAPLAN ATX REVISION PLAN
Stage 1: Assess areas of strengths and weaknesses
Review the topic listings in the revision table plan below
Determine whether or not the area is one with which you are comfortable
Comfortable Not comfortable

with the technical content with the technical content
Read the relevant chapter(s) in

Kaplan’s study text
Attempt the test your understanding

examples if unsure of an area
Attempt appropriate online tests
Review the pocket notes on this area
Stage 2: Practise questions

Follow the order of revision of topics as recommended in the revision table plan below and attempt
the questions in the order suggested.
Try to avoid referring to text books and notes and the model answer until you have completed your
attempt.
Try to answer the question in the allotted time.
Review your attempt with the model answer and assess how much of the answer you achieved in
the allocated exam time.
Fill in the self-assessment box below and decide on your best course of action.
Comfortable with question attempt Not comfortable with question attempts
Focus on these areas by:

• Reworking Test Your Understanding
examples in Kaplan’s Study Text
• Revisiting the technical content from
Kaplan’s pocket notes
• Working any remaining questions on
that area in the exam kit
• Reattempting an exam standard
Only revisit when comfortable with question in that area, on a timed,
questions on all topic areas closed book basis
Note that:
The ‘footsteps questions’ give guidance on exam techniques and how you should have
approached the question.
The ‘answer debrief’ questions have an online debrief where a top tutor works through
the question in full, explains key elements of the answer and how to gain marks.
Stage 3: Final pre-exam revision

We recommend that you attempt at least one three hours and fifteen-minute mock examination
containing a set of previously unseen exam standard questions.
It is important that you get a feel for the breadth of coverage of a real exam without advance
knowledge of the topic areas covered – just as you will expect to see on the real exam day.
Ideally this mock should be sat in timed, closed book, real exam conditions and could be
• a mock examination offered by your tuition provider, and/or
• a practise exam released on the ACCA practice platform.
KAPLAN’S DETAILED REVISION PLAN
Very few of the recent ATX exam questions focus on just one area of tax.
This is especially true of the big scenario questions, which often test several different areas.
This revision plan aims to lead you through a selection of the best questions, broadly grouped by the areas covered, and will ensure that you revise all of the key
topics.
It is especially important that you practise the more recent questions, as the examining team has its own particular style.
Familiarisation with this style of questions will help to make sure that you are as well-prepared as possible for the real exam.
Topic Study Pocket Questions Tutor guidance Date Self-assessment

Text notes to attempt attempted
Chapter Chapter
Corporation tax Corporation tax is often an area that students struggle with, but in recent exams has regularly formed the basis of one of the
compulsory scenario questions. For this reason, it would be a good idea to start by revising corporation tax to ensure that you have
enough time to cover it thoroughly.
Losses, anti-avoidance 3 1 Q11 The corporation tax scenario questions often involve a
re trading losses c/f; Dilip Group group of companies; VAT is a regular feature too.
Losses and gains 4 2 and Emma Use your Kaplan pocket notes to make sure that you
groups; Q16 Heyer are happy with all the different group definitions and
Substantial 2 1 Ltd Group implications before attempting these questions. You
shareholding and Dee must also learn the reliefs available for the various
exemption; 4 2 types of losses, as it is easy to get these confused.
Pre-entry capital losses; Rollover relief is the only capital gains relief available to
Capital loss restriction; companies, making it a highly examinable area.
Rollover relief; 9 6 VAT on land and buildings is a favourite area, and
VAT: Land and buildings 26, 27 3, 18 regularly features in questions.
and overseas aspects; Don’t worry if you find these questions hard – the
VAT registration, scenario questions will get easier with practice. There
Temporary non- 20 14 are walkthrough answers to help you if you get stuck.
residence; Spouse tax 14 10 Note that stamp duty and ethics often represent easy
planning; Ethics marks in this type of question.
KA PLA N PUB LI SHING P.27


Chapter Chapter
Substantial 2 1 Q68 Another excellent question. Having attempted the
shareholding Kitz Ltd previous two questions, you should start to find these
exemption; easier as you become familiar with the style of question
Degrouping charges; 4 2 and the areas that are frequently tested.
Transfer pricing; 2 1
Loan relationships; 2 1
Intangible fixed assets 2 1
Sale of shares versus 4 2 Q18 This big scenario question covers disposal of a
sale of assets; Grand Ltd subsidiary through sale of its shares or assets. Look at
Substantial 2 1 Group the mark allocations here to gauge how much you need
shareholding to write.
exemption; Transfer of going concern is something that is often
Degrouping charges; 4 2 tested with a transfer of trade and assets, so ensure
Stamp duty land tax; 6 7 you learn the conditions and be prepared to apply
VAT: Transfer of going 26 18 them to the scenario.
concern; The question has some easy marks for stamp duty land
Employment income; 17 12 tax and ethics, so ensure you allocate your time so that
Ethics 14 10 you can pick these up.
P.28 K A PLA N PUB L I SH ING

KA PLAN’ S DE TA ILE D REV IS ION PLAN

Chapter Chapter
Further issues: Q17 Mita Before attempting Q17, use your Kaplan pocket notes
Research and 2 1 and to make sure that you learn the rules governing the
development; Snowdon, following:
Intangibles; 2 1 Q15 – enhanced relief available to companies for R&D
Consortium relief; 4 2 Waverley expenditure,
VAT on services; 26,27 18 and Set Ltd – intangible fixed assets, and
partial exemption; Group – partial exemption for VAT
Ethics; 14 (c) – (f) There are also marks here again for group loss reliefs
Controlled foreign 5 3 and ethics.
companies Then attempt parts (c) to (f) of Q15, which is another
big scenario question covering many of the same areas.
Revise controlled foreign companies before attempting
this one.
Test question Q14 Hahn Now try attempting this question under exam
Ltd Group conditions. If you spend 15 minutes reading and
planning at the start of the exam, you have
2.25 minutes per mark, so 112 minutes in total.
KA P LAN PUBL I SH ING P.29


Chapter Chapter
The Capital taxes The key capital taxes are capital gains tax and inheritance tax.
Inheritance tax often features as part of both a compulsory question and an optional question, often linked with capital gains tax.
Inheritance tax basics; 10–12 8 Q38 Q38 is a good question to start with, covering the basic
Income tax basics; 16 11 Alex calculations and includes a straightforward income tax
Trusts 13 9 computation in part (a), and a written section on trusts.
Trusts often feature as a small written section.
Inheritance tax: Q39 This question includes popular complications: the
further computations; 10–11 8 Kepler diminution in value principle and BPR.
Business property relief 11 8 BPR features in nearly every exam, so you must learn
(BPR); the conditions in detail.
Admin 12 8 Also use your Kaplan pocket notes to make sure that
you learn the payment dates for inheritance tax,
particularly payment by instalment.


Chapter Chapter
Inheritance tax versus 12 8 Q37 The examining team often test both the inheritance tax
capital gains tax; Joan Ark and capital gains tax implications of lifetime gifts, and
Agricultural property 11 8 Q45 Anya there are many questions on this area.
relief; BPR; 11 8 (a) and (b) Q37 is not in current exam style, but is a great question
Gift holdover relief, 9 6 Q42 as it covers most of the calculations and reliefs
Private residence relief; 9 6 Cada available for both IHT and CGT.
Planning 12 15 Before attempting this question, make sure that you
revise the CGT reliefs thoroughly, and try not to get IHT
and CGT confused!
Note that part (ii) of this question, on the advantages
of lifetime gifts, is very general. You will probably have
to apply this knowledge in an exam question, and just
pick out the points which are relevant.
Have a go at Q45 (a) and (b), a real past exam question
from section B of the exam. This question covers IHT
and CGT with reliefs.
Then try Q42, another section B question.
Test question Q41 Try answering this one under exam conditions.
Pescara


Chapter Chapter
Income tax Income tax is not likely to be tested on its own at ATX, but will often feature as part of a bigger question.
For many of the questions set at this level, the examining team will not require you to do a whole income tax computation, but rather
to start part way through.
For example, you may have to calculate just the tax on some extra income, working in the margin.
Be prepared to write about employment benefits as well as doing calculations.
Employment income; 17 12 Q26 This question is split into four requirements which are
Private residence relief; 9 6 Demeter all independent of one another and can be attempted
Letting relief; in any order.
Pensions; 19 13 The first three requirements all cover TX knowledge, so
Share options 17 12 you should find these straight forward if you have
revised this well. Be careful in parts (b) and (c) as you
need to ensure you have both explanations and
calculations in order to score well.
Part (c)(ii) covers share option plans. As this is one of
the few new areas of employment income at ATX it is
frequently tested.
Company share option 17 12 Q27 The first part of this question covers two tax-
plan; Yacon Ltd advantaged share schemes: the CSOP and SIP. Share
Share incentive plan; 17 12 and Daikon schemes are frequently tested, as they are not
Private residence relief; 9 6 examined at TX.
Letting relief; The last part of the question covers another topic that
Gift with reservation 12 8 often features in the ATX exam: gifts with reservation
of benefit for inheritance tax. Make sure that you are
able to identify these and explain the consequences.


Chapter Chapter
Personal financial You may be asked to advise on suitable investment products in the exam, particularly tax efficient forms of investment.
planning Again, this is not likely to form the basis of a whole question, but will generally be combined with other areas.
Self-employment Q31 This question is made up of four parts which focus on
Income tax and NIC; 21 16 Tomas and self-employment aspects, VAT and the enterprise
Badges of trade; Ines investment scheme (EIS).
Voluntary VAT 21 16 Use your Kaplan pocket notes to revise the conditions
registration; 26 18 for EIS before attempting this question – you need a
Enterprise investment good knowledge of the rules.
scheme and EIS 18 10
reinvestment relief
Pensions 19 13 Q53 This question tests all aspects of pensions and so is a
Stella and good one to practise to get back up to speed. Although
Maris pensions were covered at TX, they still feature quite
often at ATX.
Test question Q3 Jonny Try attempting this question to exam time.
Overseas aspects of Overseas aspects for individuals are very popular in the exam, often appearing in section B questions but also sometimes in the section
personal tax A scenario questions.
Before attempting these questions, use your Kaplan pocket notes to revise the definitions of residence and domicile, and make sure
that you can explain how a person’s status affects the way they are taxed.
Overseas aspects: Q48 Juanita This is a good test of your knowledge of the rules
Residence tests; 20 14 and Buraco regarding the residence tests and remittance basis,
Remittance basis 20 14 (b) which regularly feature in the exam.


Chapter Chapter
Capital gains tax: 20 14 Q50 This is a great question to revise the temporary
overseas aspects Max absence rules for CGT, with IHT and CGT for lifetime
gifts too.
It contains a both words and numbers, and you must
apply the rules to the scenario to score well.
Income tax overseas 20 14 Q7 Part (d) of this question covers the remittance basis for
aspects Joe and income tax. This is often tested, so make sure that you
Fiona (d) learn the rules.
Test question Q46 Try attempting this excellent question, covering
Mirtoon various aspects of overseas personal tax, to exam time.
Business scenarios There are lots of business scenarios for the examining team to test, and because of the many aspects of tax that apply, these often
feature as big section A questions.
Much of the knowledge required is basic TX knowledge, but you must make sure you keep this knowledge up to date.
Commencement of 21 16 Q5 This is a scenario involving calculating the additional
trade with basic income Pippin finance needed for an individual to start a business as
tax; NICs; a sole trader.
IHT re lifetime gift; 10 8 There are many easy marks available for basic
Property income; 18 11 knowledge – the hard part is finding the relevant
EIS relief; 18 10 information and structuring your answer.
Ethics 14 10
Sole trader cessation; 22 16 Q2 This question tests cessation of trade for a sole trader
TOGC; 26 18 Ziti with alternative cessation dates. It also looks at the
IHT impact of date of 10 8 transfer of going concern rules for VAT, which are a
death; popular topic in the exam so ensure you learn the rules
VCT and EIS; 18 10 around these.
Ethics 14 10 There is also some IHT as well as tax efficient
investments and ethics.


Chapter Chapter
Test question Q4 This is a good question on changing business scenarios,
Ray, which also tests VAT registration, husband and wife
Shanira and planning and some overseas aspects!
Kelly
Incorporation; 22 16 Q34 Enid Incorporation is a popular scenario as there are many
CGT: (a) and (b) different tax implications.
Incorporation relief; 22 16 This question cover some of these areas, particularly
Incorporation loss relief; 22 16 the CGT aspects with some planning points.
Business asset disposal
relief 9 6
Test question Q15 Try attempting this question to exam time.
Waverley
and Set Ltd
Group
(a) – (b)
Qualifying interest 16 11 Q28 This section B question is mainly made up of areas
payments; Amy and which are within the TX syllabus, such as partnership
Partnerships; Bex profit allocation. Redundancy payments are very
23 16 common in the exam so make sure you revise these
Redundancy; before attempting this question.
Income tax 17 12
computation
16 11
Test question Q9 Hiromi Try attempting this question to exam time.


Chapter Chapter
Family companies and The following are also common scenarios that you need to be familiar with, although areas such as IR35, purchase of own shares
planning scenarios and liquidations tend to only come up every few sittings in the exam.
Business structure: Q33 Before attempting this question, you may want to use
unincorporated versus 21, 2 16, 1 Desiree your Kaplan pocket notes to revise loss reliefs for
company; individuals.
Loss reliefs; 3 1 There is also a requirement around R&D which is a
R&D relief; 2 1 popular topic in the ATX exam. Ensure you are happy
with the relief available.
VAT registration 26 18
Extraction of funds 24 17 Q34 Enid Extraction of funds from a company is an area you
from a company (c) should be familiar with. Practise this question to see
how this topic could be tested in the exam.
IR35 24 17 Q52 You may want to revisit the test your understandings
Monisha covering the calculation of deemed direct payments
and Horner under IR35 before attempting this question.
(b)
Purchase of own shares 24 17 Q60 Make sure you learn the conditions for purchase of
Traiste Ltd own shares before you do this question.
Part (c) illustrates another way that the examining
team can test extraction of funds from a company.
Close companies; 24 17 Q57 Close companies are a fairly regular feature in the
VAT: Partial exemption 26 18 Nocturne exam. Make sure that you know the definition and the
Ltd tax consequences. This question also covers VAT for
partially exempt businesses, which is another area that
you need to be happy with.


Chapter Chapter
Liquidations 8, 24 5, 17 Q7 Liquidations are not tested regularly, but are fairly
Joe and straightforward and mainly involve consideration of
Fiona (a) the difference in tax treatment between dividends and
capital gains.
Note that not all of the questions are referred to in the programme above.
We have recommended an approach to build up from the basic to exam standard questions where possible.
The remaining questions are available in the kit for extra practice for those who require more questions on some areas.

TAX RATES AND ALLOWANCES
Throughout this exam kit:
1 You should assume that the tax rates and allowances for the tax year 2023/24 and for the
financial year to 31 March 2024 will continue to apply for the foreseeable future unless you
are instructed otherwise.
2 Calculations and workings need only to be made to the nearest £.
3 All apportionments should be made to the nearest month.
4 All workings should be shown.
Income tax
Normal Dividend
rates rates
Basic rate £1 – £37,700 20% 8.75%

Higher rate £37,701 – £125,140 40% 33.75%
Additional rate £125,141 and over 45% 39.35%
Savings income nil rate band – Basic rate taxpayers £1,000
– Higher rate taxpayers £500
Dividend nil rate band £1,000
A starting rate of 0% applies to savings income where it falls within the first £5,000 of taxable
income.
Personal allowance
Personal allowance £12,570
Transferable amount £1,260
Income limit £100,000
Where adjusted net income is £125,140 or more, the personal allowance is reduced to zero.
Residence status
Days in UK Previously resident Not previously resident
Less than 16 Automatically not resident Automatically not resident
16 to 45 Resident if 4 UK ties (or more) Automatically not resident
46 to 90 Resident if 3 UK ties (or more) Resident if 4 UK ties
91 to 120 Resident if 2 UK ties (or more) Resident if 3 UK ties (or more)
121 to 182 Resident if 1 UK tie (or more) Resident if 2 UK ties (or more)
183 or more Automatically resident Automatically resident
Remittance basis charge

UK resident for: Charge
Seven out of the last nine years £30,000
12 out of the last 14 years £60,000
TAX RA TES AN D A LLOWAN CES
Car benefit percentage
The relevant base level of CO2 emissions is 55 grams per kilometre.

The percentage rates applying to petrol cars (and diesel cars meeting the RDE2 standard) with CO2
emissions up to this level are:
51 grams to 54 grams per kilometre 15%

55 grams per kilometre 16%
The percentage for electric cars with zero CO2 emissions is 2%.
For hybrid-electric cars with CO2 emissions between 1 and 50 grams per kilometre, the electric
range of a car is relevant:
130 miles or more 2%
70 to 129 miles 5%
40 to 69 miles 8%
30 to 39 miles 12%
Less than 30 miles 14%
Car fuel benefit
The base figure for calculating the car fuel benefit is £27,800.
Company van benefits
The company van benefit scale charge is £3,960, and the van fuel benefit is £757.
A van with zero CO2 emissions does not give rise to a benefit.
Individual savings accounts (ISAs)
The overall investment limit is £20,000.
Rent-a-room relief
The rent-a-room relief limit is £7,500.
Pension scheme limits

Annual allowance £40,000
Minimum allowance £4,000
Threshold income limit £200,000
Income limit £240,000
Lifetime allowance £1,073,100
The maximum contribution which can qualify for tax relief without any earnings is £3,600.
Approved mileage allowances: cars

Up to 10,000 miles 45p
Over 10,000 miles 25p

Capital allowances: rates of allowance

Plant and machinery
Main pool 18%
Special rate pool 6%
Cars
New cars with zero CO2 emissions 100%
Second-hand cars with zero CO2 emissions 18%
CO2 emissions between 1 and 50 grams per kilometre 18%
CO2 emissions over 50 grams per kilometre 6%
Annual investment allowance

Rate of allowance 100%
Expenditure limit £1,000,000
Structures and buildings allowance

Straight line allowance 3%
Cash basis accounting

Revenue limit £150,000
Cap on income tax reliefs
Unless otherwise restricted, reliefs are capped at the higher of £50,000 or 25% of income.
Corporation tax
Financial year 2021 2022 2023
Small profits rate N/A N/A 19%
Main rate 19% 19% 25%
Lower limit N/A N/A £50,000

Upper limit N/A N/A £250,000
Standard fraction N/A N/A 3/200
Marginal relief
Taxable total profits
(Upper limit – Augmented profits) × Standard fraction ×
Augmented profits
Quarterly instalments
Profit threshold £1,500,000
Value added tax (VAT)

Standard rate 20%
Registration limit £85,000
Deregistration limit £83,000
TAX RA TES AN D A LLOWAN CES
Penalties for late VAT payments

Days late Penalty
Up to 15 days None
16 to 30 days 2%
More than 30 days 4% plus a 4% daily penalty
Inheritance tax: nil rate bands and tax rates

Nil rate band £325,000
Residence nil rate band £175,000
Rate of tax on excess over nil rate band – Lifetime rate 20%
– Death rate 40%
Inheritance tax: taper relief

Years before death Percentage
reduction
More than 3 but less than 4 years 20%
Capital gains tax: tax rates

Normal Residential
rates property
Lower rate 10% 18%
Higher rate 20% 28%
Annual exempt amount £6,000
Capital gains tax: business asset disposal relief and investors’ relief
Lifetime limit – business asset disposal relief £1,000,000

investors’ relief £10,000,000
Rate of tax 10%

National insurance contributions
Class 1 Employee £1 – £12,570 per year Nil

£12,571 – £50,270 per year 12%
£50,271 and above per year 2%
Class 1 Employer £1 – £9,100 per year Nil

£9,101 and above per year 13.8%
Employment allowance £5,000
Class 1A 13.8%
Class 2 £3.45 per week

Lower profits limit £12,570
Class 4 £1 – £12,570 per year Nil

£12,571 – £50,270 per year 9%
£50,271 and above per year 2%
Rates of interest (assumed)

Official rate of interest 2.25%
Rate of interest on underpaid tax 6.50%
Rate of interest on overpaid tax 3.00%
Standard penalties for errors

Taxpayer Maximum penalty Minimum penalty – Minimum penalty –
behaviour unprompted disclosure prompted disclosure
Deliberate and 100% 30% 50%
concealed
Deliberate but 70% 20% 35%
not concealed
Careless 30% 0% 15%
Stamp duty land tax on non-residential properties

Up to £150,000 0%
£150,001 – £250,000 2%
£250,001 and above 5%
Stamp duty
Shares 0.5%
TIME LIMITS AND ELECTION DATES
Income tax
Election/claim Time limit For 2023/24

Agree the amount of trading 4 years from the end of the tax year in 5 April 2028
losses to carry forward which the loss arose
Current and prior year set-off of 12 months from 31 January following the 31 January 2026
trading losses against total end of the tax year in which the loss
income (and chargeable gains) arose
Three year carry back of trading 12 months from 31 January following the 31 January 2026
losses in the opening years end of the tax year in which the loss
arose
Three year carry back of 4 years from the end of the last tax year 5 April 2028
terminal trading losses in the of trading
closing years
Set-off of loss on the disposal of 12 months from 31 January following the 31 January 2026
unquoted trading company end of the tax year in which the loss
shares against income arose
Transfer of assets eligible for 2 years from the date of sale
capital allowances between
connected parties at TWDV
National Insurance Contributions

Class 1 primary and secondary 17 days after the end of each tax month 22nd of each
– pay days under PAYE system month
(14 days if not paid electronically)
Class 1 A NIC – pay day 22 July following end of tax year 22 July 2024
(19 July if not paid electronically)
Class 2 NICs – pay days Paid under self-assessment with balancing 31 January 2025
payment
Class 4 NICs – pay days Paid under self-assessment with income
tax

Capital gains tax

Replacement of business asset 4 years from the end of the tax year: 5 April 2028 for
relief for individuals (Rollover – in which the disposal occurred or 2023/24 sale or
relief) acquisition (if
– the replacement asset was later event)
acquired
whichever is later
Holdover relief of gain on the 4 years from the end of the tax year in 5 April 2028
gift of a business asset (Gift which the disposal occurred
holdover relief)
Disapplication of incorporation 2 years from the 31 January following 31 January 2027
relief the end of the tax year in which the
business is transferred
If sell all shares by 5 April following tax
year of incorporation:
Time limit 12 months earlier than
31 January 2026
normal claim date
EIS reinvestment relief 5 years from 31 January following the 31 January 2030
end of the tax year in which the
disposal occurred
Business assets disposal relief 12 months from 31 January following 31 January 2026
and investors’ relief the end of the tax year in which the
disposal occurred
Determination of private 2 years from the acquisition of the
residence second property
Self-assessment – individuals

Pay days for income tax and 1st instalment:
class 4 NIC
31 January in the tax year 31 January 2024
2nd instalment:
31 July following the end of tax year 31 July 2024
Balancing payment:
31 January following the end of tax year 31 January 2025
Pay day for CGT (not UK 31 January following the end of tax year 31 January 2025
residential property) and class 2
NIC
Pay day for CGT on UK Within 60 days of the disposal
residential property disposals
TIME LIMITS A ND E LE CTION DA TES
Self-assessment – individuals
Filing dates
If notice to file issued by Paper return:
31 October following end of tax 31 October following end of tax year 31 October 2024
year
Electronic return:
31 January following end of tax year 31 January 2025
If notice to file issued after

31 October following end of tax 3 months from the date of issue of the
year notice to file
Retention of records
Business records 5 years from 31 January following end of 31 January 2030
the tax year
Personal records 12 months from 31 January following 31 January 2026
end of the tax year
HMRC right of repair 9 months from date the return was filed
Taxpayers right to amend a 12 months from 31 January following 31 January 2026
return end of the tax year
Error or mistake claim 4 years from the end of the tax year 5 April 2028
HMRC can open an enquiry 12 months from submission of the
return
HMRC can raise a discovery
assessment
– No careless or deliberate 4 years from the end of the tax year 5 April 2028
behaviour
– Tax lost due to careless 6 years from the end of the tax year 5 April 2030
behaviour
– Tax lost due to deliberate 20 years from the end of the tax year 5 April 2044
behaviour
Taxpayers right of appeal 30 days from the assessment
against an assessment – appeal in writing

Inheritance tax

Lifetime IHT on CLTs Gift before 1 October in tax year:
– pay day Following 30 April 30 April 2024
Gift on/after 1 October in tax year:
6 months after the end of the month of
the gift
Death IHT:
on lifetime gifts within seven 6 months after the end of the month of
years of death (CLTs and PETs) death
and on the estate value
Deed of variation 2 years from the date of death
– in writing
Transfer of unused nil rate 2 years from the date of the second death
band to spouse or civil partner
Corporation tax
Election/claim Time limit

Replacement of business asset relief for 4 years from the end of the accounting period:
companies (Rollover relief)
– in which the disposal occurred or
– the replacement asset was acquired
whichever is later
Set-off of brought forward losses against 2 years from the end of the accounting period in
total profits (income and gains) which the loss is relieved
Current year set-off of trading losses 2 years from the end of the accounting period in
against total profits (income and gains), which the loss arose
and
12 month carry back of trading losses
against total profits (income and gains)
Surrender of current period and brought 2 years after the claimant company’s accounting
forward losses to other group companies period
(group relief and consortium relief)
Election for transfer of capital gain or loss 2 years from the end of the accounting period in
to another company within the gains group which the disposal occurred by the company
actually making the disposal
TIME LIMITS A ND E LE CTION DA TES
Self-assessment – companies

Pay day for small and medium companies 9 months and one day after the end of the
accounting period
Pay day for large companies Instalments due on 14th day of:
– Seventh, Tenth, Thirteenth, and Sixteenth
month after the start of the accounting
period
Filing dates Later of:
– 12 months from the end of the accounting
period
– 3 months form the issue of a notice to
deliver a corporation tax return
Companies error or mistake claim 4 years from the end of the accounting period
HMRC can open an enquiry 12 months from the actual submission of the
return
Retention of records 6 years from the end of the accounting period
Value added tax

Compulsory registration
Historic test:
– Notify HMRC 30 days from end of the month in which the
threshold was exceeded
Beginning of the month, one month after the
– Charge VAT
month in which the threshold was exceeded
Future test:
– Notify HMRC 30 days from the date it is anticipated that the
threshold will be exceeded
the date it is anticipated that the threshold will
– Charge VAT
be exceeded
(i.e. the beginning of the 30-day period)
Compulsory deregistration 30 days from cessation
Filing of VAT return and payment of VAT End of month following the return period

Section 1
PRACTICE QUESTIONS – SECTION A
1 GAIL AND BRAD (ADAPTED) Walk in the footsteps of a top tutor
You should assume that today’s date is 1 June 2024.

Your manager has had a meeting with Gail and her father Brad, both of whom are clients of
your firm. Gail owns the whole of the ordinary share capital of Aero Ltd.
Advice is required in respect of:
– the corporation tax issues in relation to disposals of a building and some shares,
– the extraction of funds from a company as either a bonus or a dividend,
– the consequences of non-disclosure of income, and
– the inheritance tax consequences of lifetime gifts.
The following exhibits provide information relevant to the question:
1 Gail – extract from a memorandum prepared by your manager
2 Schedule prepared by Mill, a junior member of your firm’s tax department
3 Brad – extract from a memorandum prepared by your manager
4 Work to be carried out – email from your manager
This information should be used to answer the question requirements.
Exhibit 1 – Gail
Extract from a memorandum prepared by your manager – dated 1 June 2024
Gail – background
Gail was born in 1976 and is resident and domiciled in the UK. She owns the whole of the
ordinary share capital of Aero Ltd (A Ltd) and works full-time as a director of the company.
A Ltd owns the whole of the ordinary share capital of Zephyr Ltd (Z Ltd). A Ltd and Z Ltd are
both UK resident trading companies. A Ltd and Z Ltd both pay corporation tax at the main
rate.
KAPLAN PUBLISHING 1
Historical transactions in respect of A Ltd and Z Ltd – all transactions took place at market
value
1 January 2016 A Ltd acquired the whole of the ordinary share capital of Z Ltd for
£180,000.
1 October 2020 A Ltd sold a building (the Simpson Building) to Z Ltd for £110,000. A Ltd
had purchased this building for £75,000 on 1 December 2012.
1 March 2022 A Ltd sold a brand to Z Ltd for £170,000, its market value at the time was
£230,000. A Ltd had purchased this brand for £115,000 on 1 June 2018.
Proposed transactions – all transactions will take place at market value
Gail intends to raise a substantial sum of money by carrying out the following transactions:
1 24 June 2024 Z Ltd will sell the Simpson Building to an unrelated purchaser for
£140,000. Rollover relief will not be claimed in respect of this
disposal.
Z Ltd will pay a dividend to A Ltd equal to the post-tax proceeds of
this sale.
2 1 July 2024 A Ltd will sell the whole of the ordinary share capital of Z Ltd for
£250,000.
3 15 July 2024 All of the cash realised by A Ltd as a result of transactions 1 and 2
will be paid to Gail in the form of either a dividend or a bonus.
Non-disclosure of income
Gail has realised that she has not declared some of her income in respect of the tax year
2019/20. As a result of this, her income tax liability for that tax year was understated. I have
already explained the interest and penalties which may be charged in respect of this error.
2 KA PLAN PUB LISHIN G

PRA CTICE QUES TIO NS – SECTION A : S E CTI O N 1
Exhibit 2 – Schedule prepared by Mill
Cash which will be available to pay to Gail as a result of the proposed transactions 1 and 2
£
Sale of the Simpson Building by Zephyr Ltd
Sale proceeds 140,000
Less: Cost (110,000)
Indexation allowance (October 2020 to June 2024)
£110,000 × 0.105 (11,550)
–––––––
Chargeable gain 18,450
Less: Corporation tax payable by Zephyr Ltd at 25% (4,613)
–––––––
Dividend of post-tax proceeds paid to Aero Ltd 13,837
Less: Corporation tax payable by Aero Ltd at 25% (3,459)
–––––––
Cash available in respect of the sale of the Simpson Building 10,378
Sale proceeds in respect of Zephyr Ltd 250,000
–––––––
Total cash available for Gail 260,378
–––––––
Notes
1 I do not think there will be a chargeable gain on the sale of Zephyr Ltd due to the
substantial shareholding exemption.
2 I think there will be a degrouping charge in respect of the brand but I do not know
how to compute it.
Mill
Exhibit 3 – Brad
Extract from a memorandum prepared by your manager – dated 1 June 2024

Brad – background
Gail’s father Brad is 70 years old and is married to Laura. He has always been UK domiciled.
Inheritance tax planning
Brad’s estate is worth approximately £5 million. He has not made any lifetime gifts and, in
his will, he intends to leave half of his estate to his daughter, Gail, and the other half to his
wife, Laura. I pointed out that it may be advantageous to make a lifetime gift to Gail. Brad
agreed to consider giving Gail 1,500 of his shares in Omnium Ltd and has asked for a general
summary of the inheritance tax advantages of making lifetime gifts to individuals.
Omnium Ltd is an unquoted company. Brad was given his shares in the company by his wife
on 1 January 2020. The ownership of the share capital of Omnium Ltd is set out below.
KAPLAN P UBLI S H I N G 3
Shares
Laura (Brad’s wife) 4,500
Brad 3,000
Vic (Laura’s brother) 1,500
Christine (friend of Laura) 1,000
––––––
10,000
––––––
The current estimated value of a share in Omnium Ltd is set out below.
Shareholding Value per
share
£
Up to 25% 190
26% to 50% 205
51% to 60% 240
61% to 74% 255
75% to 80% 290
More than 80% 300
Exhibit 4 – Work to be carried out
Email from your manager – dated 1 June 2024

Please prepare briefing notes to address the following:
(a) Schedule prepared by Mill (Exhibits 1 and 2)
I can confirm that there are no computational errors in the schedule but I suspect
that Mill will have made a few technical errors.
Please identify and explain any errors in the schedule, explain whether or not the
notes to the schedule are or are not correct, and calculate the correct amount of total
cash available to pay to Gail.
The following movements in the Retail Prices Index should be used, where necessary.
December 2012 to December 2017 0.127
January 2016 to December 2017 0.075
(11 marks)

(b) Payment to Gail (Exhibit 1)

Calculate the additional tax and national insurance contributions due, as reduced by
any corporation tax savings, if all of the cash realised by A Ltd as a result of the
proposed transactions 1 and 2 is paid to Gail in the form of:
(i) a bonus
(ii) a dividend.
Gail’s annual income tax liability in respect of her annual salary of £85,000 from A Ltd
is £21,432. This will be her only source of income in the tax year 2024/25 other than
any payments received from A Ltd as outlined above. (9 marks)
(c) Non-disclosure of income (Exhibit 1)
State the other matters which need to be considered, by us and by Gail, in relation to
the disclosure of the error to HM Revenue and Customs (HMRC). (5 marks)
(d) Inheritance tax (Exhibit 3)
(i) Explain the inheritance tax advantages of making lifetime gifts to individuals,
in general. (7 marks)
(ii) In respect of the possible gift of 1,500 shares in Omnium Ltd to Gail:
– calculate the fall in value of Brad’s estate which will result from the gift
– provide a detailed explanation of whether or not business property relief
would be available in respect of the gift and, on the assumption that it
would be available, the manner in which it would be calculated
– state briefly any other tax issues arising from the gift, which will need to
be considered at a later date. (8 marks)
Tax manager
Required:
Respond to the instructions in the email from your manager.
Note: The split of the mark allocation is shown in Exhibit 4 – Work to be carried out.
(40 marks)
Professional marks will be awarded for the demonstration of skill in communication,
analysis and evaluation, scepticism and commercial acumen in your answer (10 marks)
(Total: 50 marks)
2 ZITI (ADAPTED) Walk in the footsteps of a top tutor

Your manager has received a letter from Ziti. Ziti owns and runs an unincorporated business
which was given to him by his father, Ravi.
In addition to some ethical considerations which have been raised by your manager, Ziti
requires advice in respect of:
– the net proceeds after income tax and capital gains tax from the disposal of his
unincorporated business under two alternative methods,
– the value added tax (VAT) implications of the cessation of trade and disposal of assets,
– the potential inheritance payable on the gift of the business to Ziti in the event of Ravi’s
death, and
– the income tax implications of an investment in enterprise investment scheme (EIS) or
venture capital trust (VCT) shares.
1 Ziti – extract from letter
2 Appendix attached to letter from Ziti
3 Work to be carried out – email from manager
Exhibit 1 – Ziti
Extract from a letter from Ziti
I have decided that, due to my father’s serious illness, I want to be able to look after him on
a full-time basis. Accordingly, I am going to sell my business and use the proceeds to buy a
house nearer to where he lives and some shares.
My father started the business in 2009 when he purchased the building referred to in the
business assets below. He gave the business (consisting of the goodwill, the building and
the equipment) to me on 1 July 2020 and we submitted a joint claim for gift holdover relief,
such that no capital gains tax was payable. I have no sources of income other than this
business.
I have identified two possible methods of disposal.
(i) My preferred approach would be to close the business down. I would do this by selling
the building and the equipment on 31 March 2025 at which point I would cease
trading.
(ii) My father would like to see the business carry on after I sell it. For this to occur,
I would have to continue trading until 31 March 2026 and then sell the business to
my sister who would continue to operate it. I will charge my sister market value for
all of the assets except the building, which I will sell to her for £300,000. My sister is
not willing to make a gift holdover relief claim.
I attach an appendix setting out the information you requested in relation to the business.
In order to keep a steady income stream I have plans to purchase a rental property which I
will let out from 6 April 2025. The annual taxable rental income will be £52,000.

Sadly, I have been told that my father is unlikely to live for more than three years. Please let
me know whether his death could result in an inheritance tax liability for me in respect of
the gift of the business.
My father’s only lifetime gift, apart from the business given to me, was of quoted shares to
a discretionary (relevant property) trust on 1 May 2016. The shares had a market value of
£190,000 at the date of the gift and did not qualify for business property relief.
Exhibit 2 – Appendix
Appendix attached to letter from Ziti
Business assets (all figures exclude value added tax (VAT))
Goodwill Building Equipment
£ £ £
Original cost of the business assets 0 60,000 18,000
Market value at the time of my father’s gift
on 1 July 2020 40,000 300,000 9,000
Expected market value as at 31 March 2025 40,000 330,000 10,000
Expected market value as at 31 March 2026 45,000 350,000 10,000
Financial position of the business
From 1 April 2024, it can be assumed that the business generates trading profits of £5,000
per month. Trading profits will increase to £6,000 per month from 1 April 2025. The only tax
adjustment required to these figures is in respect of capital allowances.
The tax written down value of the main pool as at 31 March 2024 was £Nil. I purchased
business equipment for £6,000 on 1 May 2024. There have been no disposals of equipment
since 31 March 2024. I am happy to make any elections which will be beneficial from a tax
perspective.
Tax-efficient investments
After selling the business I plan to use some of the sale proceeds to buy some shares, which
I hope will save me some income tax as well as generating a small amount of income. I may
consider investing in enterprise investment scheme (EIS) shares but am aware of the high
level of risk involved. However, I understand that venture capital trusts (VCTs) have a lower
level of risk.
Please let me have a comparison of the income tax implications of these two forms of
investment on the assumption that I will invest £25,000 in the tax year 2026/27. I plan to
keep the shares for at least five years.
Payment from HMRC
I have recently received £5,000 into my bank account from HMRC. I do not know what it
relates to, but it is their error so I am going to keep the money.
Additional background information
– Ravi and I are both resident and domiciled in the UK.
– All of the equipment is movable and no item has a cost or market value of more than
£6,000.
– The business is registered for VAT.
– No election has been made in respect of the building in relation to VAT.
Extract from an email from your manager

Please prepare notes, which we can use in a meeting with Ziti, which address the following
issues:
(a) Sale of the business (Exhibits 1 and 2)
(i) Calculations to enable Ziti to compare the financial implications of the two
possible methods of disposal. You will need to calculate:
– Ziti’s taxable trading profits from 1 April 2024 onwards and the income
tax thereon, and
– any capital gains tax (CGT) payable.
You should include:
– explanations of the availability of any CGT reliefs
– a summary of the post-tax cash position, and
– any necessary assumptions. (17 marks)
(ii) Explanations of whether or not VAT would need to be charged on either or
both of the alternative disposals. (5 marks)
(b) Inheritance tax (Exhibits 1 and 2)
Calculations of the amount of inheritance tax which would be payable by Ziti for all
possible dates of his father’s death between 2 June 2024 and 30 June 2027. You
should include an explanation of the availability of any inheritance tax reliefs.
When calculating these potential inheritance tax liabilities, you should assume that
Ziti will sell the business on 31 March 2025.
The best way for you to approach this is to identify the particular dates on which the
inheritance tax liability will change. (9 marks)
(c) Tax-efficient investments (Exhibit 2)
A comparison of the income tax implications for Ziti of investing £25,000 in either EIS
shares or VCT shares in the tax year 2026/27, as requested. (4 marks)
(d) HMRC error (Exhibit 2)
The issues arising and the actions we should take as a result of Ziti’s plans for the
HMRC payment. (5 marks)
Tax manager
Required:
(40 marks)
analysis and evaluation, scepticism and commercial acumen in your answer. (10 marks)
(Total: 50 marks)

3 JONNY (ADAPTED) Walk in the footsteps of a top tutor
You should assume that today’s date is 1 September 2024.

Your manager has had a meeting with Jonny who is establishing a new business. Jonny will
use an inheritance he received following the death of his mother to finance this new venture.
We have been asked to advise Jonny on:
– the income after tax from the new business, including consideration of the tax relief
available for trading losses,
– the employment status of salesmen to be hired by Jonny, including consideration of
the personal service company legislation, and
– the value of the inheritance to be received by Jonny after deducting any inheritance
tax due.
There are also some ethical issues to consider.
1 Unincorporated business – Jonny’s income and plans for the new business
2 Inheritance tax payable – draft calculation
Exhibit 1 – Unincorporated business
Jonny’s recent employment income

Jonny worked full-time for many years until 30 June 2022 earning a salary of £6,000 per
calendar month. From 1 July 2022, he worked part-time earning a salary of £2,000 per
calendar month until he ceased employment on 31 March 2024.
Plans for the new business
Jonny’s new business will begin trading on 1 November 2024.
Two budgets have been prepared for Jonny’s business based on customer demand being
either strong or weak. You should assume that no tax adjustments are required to Jonny’s
budgeted profit/loss figures for the first two tax years.
Strong Weak
demand demand
£ £
Budgeted taxable trading profit/(loss):
2024/25 9,200 (15,200)
2025/26 30,000 18,000
–––––– –––––––
Aggregate budgeted net profit of the first two tax years 39,200 2,800
–––––– –––––––
Jonny does not have any other sources of income or any taxable gains in any of the relevant
tax years.
Salesmen
Jonny is proposing to enter into the following contractual arrangements with two part-time
salesmen:
– They will work on Tuesday and Wednesday mornings each week.
– They will be paid a fee of £300 for each new sales contract obtained. No other
payments will be made.
– They will use their own cars.
– Jonny will lend each of them a laptop computer.
– The salesmen intend to set up companies through which to operate after the first two
months.
Jonny is concerned that the relationships may be caught by the personal service company
legislation, and that he may have reporting requirements to fulfil.
Exhibit 2 – Inheritance tax payable
Jonny’s mother died on 31 July 2024. She left the whole of her estate, with the exception of
a gift to charity, to Jonny.
I attach a computation of the inheritance tax due; this was prepared by a junior member of
staff and has not yet been reviewed. I can confirm, however, that all of the arithmetic, dates
and valuations are correct. In addition, there were no other lifetime gifts, and none of the
assets qualified for business property relief.
Computation – Inheritance tax payable on the death of Jonny’s mother
Mother’s lifetime gift £

1 June 2020 – Gift of cash to Jonny 30,000
–––––––
Mother’s chargeable estate at death on 31 July 2024
£ £
Freehold property – Mother’s main residence 530,000
UK quoted shares 400,000
Chattels – furniture, paintings and jewellery 40,000
Less: Items individually worth less than £6,000 (25,000)
–––––––
15,000
Cash 20,000
–––––––
965,000
Less: Gift to charity (70,000)
Annual exemption (3,000)
–––––––
Chargeable estate 892,000
Less: Nil rate band 325,000
Gift in the seven years prior to death
(£30,000 – £6,000) (24,000)
–––––––
(301,000)
–––––––
591,000
–––––––
Inheritance tax (£591,000 × 40%) 236,400
–––––––


Please prepare a memorandum for Jonny’s client file addressing the following issues:
(a) Unincorporated business (Exhibit 1)
(i) Jonny’s post-tax income
Jonny has asked for an approximation of his post-tax income position for the
first two tax years. I want you to prepare calculations in order to complete the
following table, assuming that any available trading loss reliefs will be claimed
in the most beneficial manner.
You should include explanations of the options available to relieve the loss,
clearly identifying the method which will maximise the tax saved (you do not
need to consider carrying the loss forward).
Table to be completed
Strong Weak
demand demand
£ £
Aggregate budgeted net profit of the first two tax years 39,200 2,800
Aggregate income tax (payable)/refundable in respect
of the profit/loss for the first two tax years ? ?
––––––– –––––––
Budgeted post-tax income ? ?
––––––– ––––––
Include a brief explanation as to why these calculations are only an
approximation of Jonny’s budgeted post-tax income. (12 marks)
(ii) Salesmen
Explain which of the proposed contractual arrangements with the salesmen
indicate that they would be self-employed and state any changes which should
be made to the other arrangements in order to maximise the likelihood of the
salesmen being treated as self-employed.
In the event that the arrangements are treated as employment, explain how,
if at all, the personal service company legislation would apply to Jonny’s
business and the salesmen. (14 marks)
(iii) New contracts for the business
Jonny is hoping to obtain contracts with local educational establishments and
has asked us to help. One of our clients is a college and an ex-client of ours
provided services to a number of schools and colleges. Accordingly, we have
knowledge and experience in this area.
Explain the extent to which it is acceptable for us to use the knowledge we
have gained in respect of our existing client and ex-client to assist Jonny.
(5 marks)
(b) Jonny’s inheritance from his mother (Exhibit 2)
I want you to review the inheritance tax computation and identify any errors. You
should explain each of the errors you find and calculate the value of the inheritance
which Jonny will receive after inheritance tax has been paid. (9 marks)
Tax manager
Required:
(40 marks)
(Total: 50 marks)
4 RAY, SHANIRA AND KELLY (ADAPTED) Walk in the footsteps of a top tutor
You should assume that today’s date is 1 July 2024.

Your manager has received schedules of information from Ray and Shanira and an email from
Ray’s niece Kelly in connection with their personal tax affairs. Ray and Shanira have been
clients for some time, and Kelly has just appointed us to replace her existing tax adviser.
Advice is required in respect of the following issues:
– the income tax and national insurance payments to be made in respect of Ray’s new
unincorporated business,
– voluntary registration for value added tax (VAT) and the recovery of input VAT,
– the capital gains tax and inheritance tax implications of gifts to be made either before
or after Ray and Shanira’s marriage, and
– the income tax treatment of overseas rental income for a non-UK domiciled individual.
1 Ray – schedule of information
2 Shanira – schedule of information
3 Kelly – email received
Exhibit 1 – Ray
Schedule of information received from Ray
I was born in 1965. I am resident and domiciled in the UK. Shanira and I are getting married
on 17 September 2024.
Ray – unincorporated business
I was employed part-time until 31 March 2024. The annual salary in respect of my part-time
job was £15,000. The whole of my income tax liability has always been settled via tax
deducted at source.

I began trading on 1 June 2024. I purchased a computer on 3 June 2024, which is used both
in the business and personally. I am not registered for the purposes of value added tax
(VAT).
You have advised me that my taxable trading profits are calculated using the accruals basis,
rather than the cash basis.
You have already informed me that my budgeted taxable trading profit, and my income tax
liability in respect of all of my income will be:
Tax year Taxable trading profit Income tax liability
2024/25 £46,000 £6,686
2025/26 £66,000 £13,832
What tax payments will I be required to make between 1 July 2024 and 31 March 2027?
Exhibit 2 – Shanira
Schedule of information received from Shanira

I was born in 1968. I am resident and domiciled in the UK. Ray and I are getting married on
17 September 2024.
Gifts from Shanira to Ray
On 1 February 2024, I gave Ray a house situated in the country of Heliosa. We have only
ever used this house for our holidays. The house was valued at £360,000 at the time of this
gift. I purchased the house on 1 September 2007 for £280,000.
I will make the following further gifts to Ray between now and the end of the calendar year
2024:
– Painting
I purchased this painting at auction for £15,000 on 1 March 2020. It is a painting which
we both love and would never sell. However, I obviously paid too much for it, as its
current market value is only £7,000.
– Shares in Solaris plc
I will give Ray the whole of my holding of 7,400 ordinary shares in Solaris plc. The
current market value is £9.20 per share.
I acquired these shares on 1 October 2022 when Solaris plc purchased the whole of
the ordinary share capital of Beem plc. This takeover was a genuine commercial
transaction.
At the time of the takeover:
– I owned 3,700 ordinary shares in Beem plc, which I had purchased on 1 June 2016 for
£12,960.
– In addition to the shares in Solaris plc, I also received £14,800 in cash from Solaris plc.
– An ordinary share in Solaris plc was worth £8.40 on 1 October 2022.
Additional information from your manager

– Shanira is a higher rate taxpayer.
– The gift of the house to Ray on 1 February 2024 was Shanira’s first lifetime gift.
– You should use the current market values of the painting and the shares in Solaris plc
in order to calculate the chargeable gains arising on these gifts.
– Neither gift holdover relief nor business asset disposal relief will be available in
respect of the proposed gift of the shares in Solaris plc.
– Shanira has not made any other chargeable disposals since 5 April 2023.
– There is capital gains tax in the country of Heliosa but no inheritance tax.
– There is no double tax treaty between Heliosa and the UK.
Exhibit 3 – Kelly
Extract from an email from Kelly

I was born in 1991. I have always been domiciled in the country of Falgar. I was resident in
the UK from 6 April 2001 until I moved to Falgar on 1 February 2022.
However, I have not been happy since I moved to Falgar. Consequently, I have decided to
return to the UK on 1 May 2025, at which point I will resume UK residency.
Rental income in the country of Falgar
I will keep my house in Falgar, so that I can return to it at some future time. In the meantime,
from 1 May 2025 I will rent it out.
My understanding of the UK tax position in relation to this rental income is as follows:
– provided I do not bring the rental income into the UK, it will not be subject to UK
income tax
– if I do bring the income into the UK, I will then have to pay UK income tax upon it.
Please explain whether or not my understanding is correct.
I have also been contacted by a tax advisor who told me about some sophisticated tax
planning I can do to reduce my UK tax liability which I would like to use going forwards. The
advisor tells me that the scheme is a tax planning scheme rather than involving tax
avoidance or evasion. I don’t really understand the difference between the three, can you
explain this please?
Taxation in Falgar
– You should assume that Kelly will be a higher rate taxpayer.
– Income tax is charged at 26% on all income arising in Falgar.
– There is no capital gains tax or inheritance tax.
– There is no double tax treaty between the UK and Falgar.


Please carry out the following work:
Prepare a memorandum for the client files which addresses the following issues in respect
of Ray and Shanira:
(a) Ray – unincorporated business (Exhibit 1)
– Calculations of the income tax and national insurance contribution payments
to be made between 1 July 2024 and 31 March 2027 and the dates on which
they will be payable.
– Ray has told me that he does not intend to withdraw all of the profits of the
business. Instead, he will either increase his inventory levels or acquire
additional equipment, and he has asked how this will affect his taxable income.
(11 marks)
– Ray is incurring input tax and is considering registering voluntarily for VAT. Set
out the information we need in order to advise him on whether or not
voluntary registration is possible and/or financially beneficial and explain why
the information is needed.
– An explanation of whether or not Ray can recover the input tax in respect of
the computer purchased on 3 June 2024 if he registers for VAT. (5 marks)
(b) Gifts from Shanira to Ray (Exhibit 2)
– A calculation of the capital gains tax payable in respect of the gift of the house
in Heliosa based on the currently available information, together with any
further information required to finalise the liability, and the due date of
payment.
– An explanation, with supporting calculations, of when the further gifts should
be made to Ray. The objective here is to maximise Ray’s capital gains tax base
cost without creating a capital gains tax liability for Shanira. In order to achieve
this objective, you should consider dividing the proposed gift of the shares into
two gifts to be given on different days. (10 marks)
– The maximum possible inheritance tax liability which could arise in respect of
the proposed gifts to Ray of the painting and the shares, if Shanira were to
follow our advice in respect of their timing, together with the circumstances in
which this liability would occur. (5 marks)
With regards to our new potential client Kelly:
(c) Kelly’s rental income in the country of Falgar (Exhibit 3)
Please draft a response we can include in an email to Kelly which provides the
explanation requested in her email. (4 marks)
(d) Kelly’s tax planning scheme (Exhibit 3)
Please explain the difference between tax planning, tax avoidance and tax evasion,
and explain the actions we should take with regards to the scheme that Kelly has been
offered. (5 marks)
Tax manager
Required:
You should assume that today’s date is 1 July 2024.
(40 marks)
(Total: 50 marks)
5 PIPPIN (ADAPTED) Walk in the footsteps of a top tutor

Your manager has had a meeting with Pippin, an established client of your firm who is
resident and domiciled in the UK.
In addition to some ethical considerations which have been raised by your manager, Pippin
would like some advice in respect of the following:
– the cash position for his new business, including the calculation of income tax and
national insurance contributions and the tax relief available for trading losses,
– the capital gains tax consequences of a sale of shares that qualified for enterprise
investment scheme (EIS) relief,
– the inheritance consequences of a gift of cash, and
– the income tax treatment of renting out a property.
1 Commencement of ‘Pinova’ business – meeting notes from your manager
2 Cash receipt and cottage – notes from telephone conversation with Pippin
Exhibit 1 – Commencement of ‘Pinova’ business
Meeting notes from your manager – dated 1 June 2024
Pippin intends to start a new unincorporated business, ‘Pinova’, on 1 August 2024. He has
identified two alternative strategies: strategy A and strategy B.
The budgeted tax-adjusted profit/(loss) of the two strategies are set out below. These
figures are before the adjustments necessary in respect of the equipment purchases and
employment costs (see below).
Strategy A Strategy B
Period ending Year ending Period ending Year ending
31 March 2025 31 March 2026 31 March 2025 31 March 2026
and future years and future years
£ £ £ £
Profit/(loss) 13,000 60,000 (10,000) 135,000
–––––– –––––– –––––– ––––––

Equipment purchases and employment costs

The above profit/loss figures need to be adjusted in respect of the following:
– Both strategies will require Pippin to purchase equipment in August 2024 for £8,000.
– Strategy B will require two employees from 1 April 2025. Pippin will pay each of them
a gross salary of £2,500 per month. He will also pay them £0.50 per business mile for
driving their own cars. He expects each of them to drive 250 business miles per
month.
– Strategy A will not require any employees.
Pippin will claim the maximum capital allowances available to him. He will also claim
opening years’ loss relief in respect of the trading loss arising under strategy B.
Cessation of previous business
Pippin’s previous unincorporated business ceased trading on 31 December 2023. The
taxable profits of the business for its final three tax years were:
£
2021/22 82,000
2022/23 78,000
2023/24 14,000
Pippin had no other taxable income during these three years.
Shares in Akero Ltd
Pippin owns 16,000 shares in Akero Ltd which have a current market value of £4.50 per
share. Pippin subscribed £16,000 for these shares on 4 January 2022. Pippin obtained
income tax relief of £4,800 (£16,000 × 30%) under the enterprise investment scheme (EIS)
in the tax year 2021/22. He also claimed EIS deferral relief in that year of £16,000 in relation
to a chargeable gain on the sale of a painting.
Pippin is considering selling 5,000 of his Akero Ltd shares in order to fund his personal
expenditure during the start-up phase of the Pinova business.
Exhibit 2 – Cash receipt and cottage
Notes from a telephone conversation between your manager and Pippin
Receipt of £75,000
Pippin’s aunt, Esme, died on 31 January 2024.
On 1 September 2018, Esme’s father (Pippin’s grandfather) died leaving the whole of his
estate to Esme. However, on 1 January 2019 Pippin received £75,000 but cannot remember
whether the money came from Esme or from his grandfather’s estate.
On 1 November 2018, Esme had transferred cash of £375,000 to a trust for the benefit of
her children.
Cottage in Cornwall
Pippin owns a cottage in Cornwall which he uses for family holidays. He is now thinking
about renting out the cottage to long term tenants, but does not understand the tax
implications of doing this.
The cottage can be rented out for £1,500 a month, received in advance on the first day of
the month. Pippin would incur annual letting agent’s fees of £1,800 as well as annual
insurance costs of £580.
Pippin has a mortgage on the cottage with interest of £2,000 payable each year.

Extract from an email from your manager – dated 1 June 2024
Please prepare a memorandum for the client files which addresses the following issues:
(i) Additional funds required for the 20-month period from 1 August 2024 to 31 March
2026 (Exhibit 1)
Pippin’s taxable income will consist of the profits of the Pinova business and, for the
tax year 2025/26 onwards, he expects to receive dividend income of £500 per year.
His personal expenditure is £4,000 per month.
For the purposes of these calculations you should ignore any potential rental income
from Pippin’s cottage in Cornwall.
I want you to complete the table below to calculate the additional funds which Pippin
would require during the first 20 months of the business under each of the two
strategies (A and B) after putting aside sufficient funds to settle his tax liabilities for
the tax years 2024/25 and 2025/26. You should then evaluate the two strategies by
reference to the results of your calculations.
Pippin and I calculated his total pre-tax cash receipts; you do not need to check them.
The only adjustment required to these pre-tax cash receipts is the cost of employing
the two employees.
Strategy A Strategy B
£ £
Total pre-tax cash receipts for the 20-month period 61,000 114,500
Cost of employing the two employees 0 ( )
Pippin’s total income tax and national insurance
contribution liabilities for the tax years
2024/25 and 2025/26 ( ) ( )
––––––– –––––––
Personal expenditure (£4,000 × 20) (80,000) (80,000)

––––––– –––––––
Additional funds required
––––––– –––––––
(20 marks)
(ii) Sale of shares in Akero Ltd (Exhibit 1)
Explain the tax liabilities which would result if Pippin were to sell 5,000 of his Akero Ltd
shares in the tax year 2024/25. (7 marks)
(iii) Receipt of £75,000 (Exhibit 2)
Explain, with supporting calculations, the inheritance tax implications for Pippin of
the receipt of the £75,000. (5 marks)
(iv) Cottage in Cornwall (Exhibit 2)
Explain the income tax treatment for Pippin of the rental income to be received and
expenses incurred in relation to the cottage.
This explanation should not include any calculations. (3 marks)

(v) Disclosure of property income

Pippin has questioned how HMRC would know about his new source of property
income if he decides to rent out his cottage in Cornwall, and whether he would really
need to disclose it.
I want you to list the matters which need to be considered, by us, as tax advisers to
Pippin, and by Pippin, in relation to the disclosure or non-disclosure of this
information to HM Revenue and Customs (HMRC). (5 marks)
Tax manager
Required:
(40 marks)
(Total: 50 marks)
6 MAIA (ADAPTED) Walk in the footsteps of a top tutor

Your manager has had a meeting with Maia, a client of your firm, who wants to provide some
financial assistance to her nephew, Josh.
Advice is required in respect of:
– Josh’s post-tax income and additional cash needed
– the capital gains tax and inheritance tax implications for Maia of the proposed gifts to
Josh, and
– the income tax treatment of trust income received by Sarika, Josh’s girlfriend.
1 Maia and Josh – extracts from a memorandum prepared by your manager
2 Sarika – trust income
Exhibit 1 – Maia and Josh

Extracts from a memorandum prepared by your manager
Maia
Maia is 63 years old and has significant personal wealth. She has taxable income of
approximately £120,000 each year, much of which she is able to save. She uses her capital
gains tax annual exempt amount and her inheritance tax annual exemption every year. She
is resident and domiciled in the UK.
Maia has agreed to provide financial assistance to her nephew, Josh.
Josh – financial position
Josh recently left university and, on 6 April 2024, he started working for NL Ltd, an unquoted
company. He earns an annual gross salary of £25,200. Since 6 April 2024, NL Ltd has
provided Josh with the use of a mobile telephone (market value of £650) and a home cinema
system (market value of £1,700).
On 1 June 2024, NL Ltd issued 200 £1 ordinary shares to Josh. This share issue was not made
as part of a tax advantaged share scheme. Josh paid £300 for these shares, which had a
market value of £2,100 at that time. The shares are not readily convertible assets and Josh
does not intend to sell them until 1 April 2028.
Josh currently receives dividend income of £420 each year. He is resident and domiciled in
the UK.
Josh estimates that from 6 April 2024 he needs £2,500 per month to pay his rent and living
expenses. Maia has asked us to calculate how much cash Josh will need for the tax years
2024/25 and 2025/26, over and above his post-tax income from all sources.
Providing financial assistance to Josh – alternative strategies
Maia is considering three alternative strategies to provide financial assistance to Josh.
(i) Gift of investment property on 1 July 2024
This investment property is currently worth £370,000.
Maia purchased the property for £130,000 on 1 July 2013. Since its acquisition, this
property has been rented out for taxable net rental income of £1,100 per month. It
is a residential building, but I do not know whether or not it has been rented out as
furnished holiday accommodation.
Under this strategy, Josh would continue to rent out the property on the same basis
from 1 July 2024 onwards.
(ii) Gift of shares in Far Ltd on 1 July 2024
These shares are worth £420,000. They represent the whole of Maia’s shareholding
in the company and constitute 14% of the company’s issued ordinary share capital.
Maia’s father gave the shares to Maia on 1 November 2023 when they were worth
£375,000. That gift resulted in a chargeable gain of £225,000 of which £140,000 was
held over via a gift holdover relief claim.
Far Ltd is an unquoted trading company. It owns chargeable non-business assets
which represent 16% of its total chargeable assets.
(iii) Monthly cash gifts commencing on 1 July 2024
Maia would simply make a cash gift to Josh of £1,000 each month commencing on
1 July 2024.

Exhibit 2 – Sarika
Trust created for the benefit of Josh’s girlfriend
Maia informed me that Josh’s girlfriend, Sarika, has recently become the beneficiary of a
trust and wants some tax advice regarding the income tax treatment of the trust income.
The trust was created by a gift consisting of a number of minority holdings of quoted shares
valued at £260,000 in total on 1 June 2023.
Sarika received income from the trust for the first time in March 2024. Sarika’s only other
income is an annual salary of approximately £35,000.
Maia did not have any further information on the trust and Sarika is not currently a client
of ours, so we will need to ensure we follow the correct procedures before we do any work
for her.
Extract from the email from your manager
Please prepare a memorandum for the client files consisting of the work set out below.
(a) Josh – additional cash requirement (Exhibit 1)
Calculate the total additional cash required by Josh, over and above his income from
all sources, for the tax years 2024/25 and 2025/26, after deducting tax and national
insurance contributions (NIC).
In order to prepare the calculations efficiently, you should think about how Josh’s
taxable income in 2025/26 will differ from that in 2024/25. There is no need to
provide any narrative explanation of your calculations. (9 marks)
(b) Providing financial assistance to Josh – alternative strategies (Exhibit 1)
In respect of each of the three alternative strategies set out in my memorandum,
explain:
– The increase in Josh’s post-tax income for the 21-month period ending 5 April
2026.
You should ONLY consider the post-tax income to be received by Josh in
relation to strategies (i) and (iii) and NOT strategy (ii).
There is no need to consider the capital values of any of the strategies as, in
the short term, Josh will not realise any of this value.
– The capital gains tax liabilities FOR MAIA ONLY on the assumption that those
reliefs which are available will be claimed.
– The inheritance tax implications for Maia and Josh including consideration of
the availability of business property relief.
As I noted in my memorandum, I do not know whether the investment property
qualifies as furnished holiday accommodation or not. You should explain the liabilities
for both possibilities regarding this property. You SHOULD NOT provide a definition
of furnished holiday accommodation.
You should cover:
(i) Gift of investment property. (12 marks)
(ii) Gift of shares in Far Ltd. (7 marks)
(iii) Monthly cash gifts. (3 marks)
(c) Trust created for the benefit of Josh’s girlfriend (Exhibit 2)
A summary of the tax treatment of the income received by Josh’s girlfriend, Sarika,
as beneficiary, depending on the nature of the trust.
I understand that the only income of the trust is dividend income. (4 marks)
(d) Procedures we should follow before we agree to become Sarika’s tax advisers (Exhibit
2)
A summary of the procedures we should follow before we agree to become Sarika’s
tax advisers. (5 marks)
Tax manager
Required:
(40 marks)
(Total: 50 marks)
Required:
You should assume that today’s date is 5 December 2024.
(40 marks)
(Total: 50 marks

7 JOE AND FIONA (ADAPTED) Walk in the footsteps of a top tutor

You are an ACCA student working for a firm of accountants. Joe Sands, the finance director
of VNL Ltd, has had a meeting with your manager to discuss the liquidation of the company
and Joe’s future plans in terms of starting his own unincorporated business. In addition, Joe
has asked whether your firm will be able to advise his mother, Fiona, who is returning to the
UK after living overseas for several years.
Advice is required in respect of the following issues:
– the consequences of VNL Ltd disposing of certain plant and machinery, intangible
assets and the timing of a dividend payment,
– the ability of Joe to recover value added tax (VAT) on certain initial costs associated
with his new business, and
– the basis of taxation which will apply to Fiona on her return to the UK and her projected
income tax liability.
There are also some ethical issues to be considered if the firm is to accept Fiona as a new
client.

1 VNL Ltd
2 Joe’s future business plans
3 Fiona (Joe’s mother)
Exhibit 1 – VNL Ltd
Summary of points discussed in a meeting on 1 June 2024 and subsequent follow-up

telephone conversation
Background
Joe advised me that the company’s shareholders have decided to liquidate the company. A
liquidator is to be appointed on 1 August 2024. The company has already sold certain items
of plant and machinery and will dispose of some intangible fixed assets and make certain
payments to its shareholders.
Sale of plant and machinery
Joe explained that VNL Ltd has recently disposed of two items of plant and machinery, but
he was unsure of how to deal with them in the corporation tax computation.
The first disposal was of an item of machinery that was sold for £70,000 on 1 March 2024.
It had been purchased for £200,000 and VNL Ltd claimed the 130% super deduction on the
whole cost of this machinery.
The second disposal was of a lighting system. The system was originally purchased for
£80,000 and VNL Ltd claimed the 50% first year allowance (FYA) on the full amount. The
system was sold on 10 March 2024 for £20,000.
Sale of intangible fixed assets

On 1 September 2021, VNL Ltd purchased the trade and assets of a business from an
unrelated company. The assets included goodwill and a brand name, as detailed below.
These assets will be sold on 31 July 2024.
Goodwill Brand name
£ £
Sale proceeds 75,000 47,000
Cost 95,000 36,000
Amortisation since acquisition 19,000 5,760
Further advice – payments to the shareholders
An interim payment will be made to the shareholders followed by a final payment at the
conclusion of the liquidation which will take place in February 2025. Joe has been asked to
consider the possibility of making the interim payment prior to the appointment of the
liquidator.
Additional information
There are some further details which you will require and I have obtained these from the
client file for you. These are as follows:
– VNL Ltd is a trading company. It has always made significant trading profits, such that
it pays corporation tax at the main rate, and will be profitable in its final accounting
period. It prepares accounts to 31 March each year.
– The amortisation of the goodwill was not a tax deductible expense for VNL Ltd.
– No election was made to write off the cost of the brand name at the 4% rate.
– The company’s shareholders are all individuals, some of whom are employed by VNL
Ltd, and include both basic rate and higher rate taxpayers.
– The shares in VNL Ltd were subscribed for prior to 17 March 2016, such that investors’
relief will not be available in respect of any disposal.
Exhibit 2 – Joe’s future business plans
Points discussed in meeting on 1 June 2024
Background
Joe confirmed his intention to start trading as an unincorporated trader on 1 November
2024.
Costs already incurred
Since 1 October 2023, Joe has been purchasing consultancy services every month in respect
of the design and manufacture of the product the new business will be selling.

Business premises
A building for use as the business premises has been identified. It is a commercial property
unit, which was constructed in 2007. Joe has agreed a price with the vendor of £190,000
plus value added tax (VAT). He intends to lease a third of the building to an unrelated
business until his trading activities have grown sufficiently to require the use of the whole
building.
Joe confirmed that his trading activity will be standard-rated for VAT purposes.
Exhibit 3 – Fiona (Joe’s mother)
Points discussed in meeting on 1 June 2024

Background
Joe provided the following background on his mother’s situation.
Fiona is 74 years old and in poor health. She has lived in the country of Parella since 1992.
She will move to the UK on 1 August 2024 and acquire a home there.
Fiona’s domicile and residence status
Based on the facts provided by Joe, I have already established that, as a result of moving to
the UK:
– Fiona will become UK resident on 1 August 2024 under the split year basis.
– Fiona will also be UK resident in the tax year 2025/26.
– Fiona is domiciled in Parella. However, once she becomes UK resident, Fiona will be
deemed domiciled in the UK for the purposes of income tax and capital gains tax
(CGT) because she was born in the UK with a UK domicile of origin.
Property and interest income
Fiona’s anticipated income for the tax year 2025/26, the year after she moves to the UK, is
set out below.
£
Property income
Properties situated in the UK 26,000
Properties situation in Parella 31,000
Interest income
UK bank interest 1,700
Parellian bank interest 1,200
The income arising in Parella is stated gross of Parellian tax. Fiona will remit all of the rental
income in respect of the properties situated in Parella to the UK. The interest arising on the
Parellian bank accounts will be retained in Parella.
The rate of income tax in Parella is 18% and there is no double tax treaty between the UK
and Parella.

Manager’s email
To: Tax Senior
From: Tax Manager
Subject: Meeting with Joe Sands (VNL Ltd)
Date: 1 June 2024
Hi
I need you to prepare some notes in preparation for an internal team meeting to discuss
the various points which Joe has raised. They should address the following issues:
(a) Liquidation of VNL Ltd (Exhibit 1)
(i) Sales of plant and machinery
Explain, with supporting calculations, the corporation tax implications for VNL
Ltd of the disposals of the plant and machinery in the year ended 31 March
2024. (5 marks)
(ii) Sale of intangible fixed assets
Calculate the post-tax proceeds for VNL Ltd as a result of the sale of the
intangible fixed assets. (4 marks)
(iii) Timing of payments to shareholders
Explain the tax rates, taking into account any reliefs which may be available,
which the shareholders will pay on the amounts received from VNL Ltd,
depending on when the payment is made. (9 marks)
(b) Unincorporated business (Exhibit 2)
Explain whether or not Joe will be able to recover the related input tax for value
added tax (VAT) purposes in respect of the consultancy costs already incurred and
the planned purchase of the business premises. (7 marks)
(c) Becoming Fiona’s tax advisers (Exhibit 3)
Explain the actions which we should carry out before we become Fiona’s tax advisers.
I have already obtained her address and proof of her identity. (5 marks)
(d) Taxation of overseas income (Exhibit 3)
– Explain why the remittance basis will be available to Fiona in the tax year
2025/26 and whether or not she will be subject to the remittance basis charge.
– Calculate Fiona’s income tax liability for the tax year 2025/26 based on her
anticipated income figures. (10 marks)
The notes which you prepare will subsequently be distributed to all team members within
our firm, so please do present them in a way which will be suitable for circulation.
Tax Manager

Required:
(40 marks)
Professional marks will be awarded for demonstration of skill in communication, analysis
and evaluation, scepticism and commercial acumen in your answer. (10 marks)
(Total: 50 marks)
8 OLMA AND HOGAN (ADAPTED) Walk in the footsteps of a top tutor
You should assume that today’s date is 1 February 2025.

Your manager has had a meeting with Olma, a new client of your firm. Olma has recently
ceased employment and started a new unincorporated business. Her brother, Hogan, is an
existing client and requires some advice.
The work to be carried out is in respect of:
– a company purchase of own shares
– voluntary registration for the purposes of value added tax (VAT)
– the reliefs available in respect of a trading loss Olma is expecting to make
– a receipt of shares by Hogan from a share incentive plan (SIP), and
– a gift made by Hogan to a discretionary trust.
There are also some ethical issues to be considered.
1 Olma
2 Hogan
Exhibit 1 – Olma
Extract from a memorandum prepared by your manager
In view of the changes to her financial affairs, Olma has appointed us to replace her existing
tax advisers.
Background
On 1 November 2017, Olma purchased 2,000 of the 10,000 issued ordinary shares of BG Ltd
(an unquoted company) for £40,000 and, on the same day, began working as a restaurant
manager for the company. BG Ltd owns and operates a number of restaurants.
– Olma worked for BG Ltd from 1 November 2017 until 30 September 2024.
– However, she took unpaid leave for personal reasons from 1 September 2021 until
31 August 2022.
– On 30 September 2024, Olma ceased her employment with BG Ltd in order to start
an unincorporated cafe business.
Olma has always been resident in the UK for tax purposes. From 1 November 2017 to
30 September 2024, her only source of income was her salary from BG Ltd of £6,700 per
month. Since 1 October 2024, her only income has been trading income from her cafe which
began trading on 1 January 2025.
Sale of shares in BG Ltd
Following disagreements with the other shareholders of BG Ltd in relation to the future
direction of the business, Olma decided to leave the company and to sell her shares. Olma
sold all 2,000 of her shares back to BG Ltd on 15 October 2024 for £150,000 via a company
purchase of own shares. Olma will claim business asset disposal relief in respect of the
chargeable gain arising on this sale.
Olma’s cafe business
Voluntary registration for the purposes of value added tax (VAT)
Budgeted revenue figures indicate that Olma will be required to register for VAT with effect
from 1 September 2025. However, depending on the financial implications, Olma is
considering registering voluntarily at an earlier date. This is in order to give the impression
that the cafe is more established than it is in reality.
All of the supplies made by Olma’s cafe business are standard-rated for the purposes of
VAT.
On 1 December 2024, Olma purchased furniture and equipment for use in the cafe for
£8,000 excluding VAT. The principal recurring costs incurred by the cafe are employment
costs, food and rent in respect of the business premises. The purchases of food are zero-
rated and the rent is exempt for the purposes of VAT.
Loss planning
Olma is expecting to make a tax adjusted trading loss of £29,000 in the tax year 2024/25,
her first tax year of trading, and requires advice on the reliefs available.
Introduction of Hogan as a partner
Olma has been considering asking her brother, Hogan, to become a partner in her new
business in the future and assumes that there should be no problem with this as he is
already one of our clients.
Exhibit 2 – Hogan
Email extract from Hogan: dated 1 February 2025

For the last 30 years I have been living in the country of Baltera.
Moving to the UK
I have entered into an employment contract with VPR plc, a UK based company. I will move
to the UK to commence employment on 1 August 2025.
Employment contract with VPR plc
The contract is for a minimum period of four years.
Under the contract I will earn a salary of £16,500 per month.

In addition, I will become a member of the company’s tax-advantaged share incentive plan
(SIP). On 1 May each year, this SIP wilI award me free shares in the company. The value of
these shares will be between £1,500 and £2,500 each year, depending on the performance
of the company. I have been told that the receipt of these shares, together with any
dividends declared in respect of them, will not give rise to a tax liability in the UK.
Trust
I am planning to create a UK discretionary trust for the benefit of my two nieces. On 1 July
2026, I will give £380,000 in cash to the trust. This cash will be transferred to the trustees
from my bank deposit account in Baltera and I will pay any inheritance tax due in respect of
this gift personally. I have not made any previous lifetime gifts.
Hogan
– Hogan was born in the UK and has a UK domicile of origin. He is currently neither
domiciled nor deemed domiciled in the UK in respect of all taxes, but you should bear
in mind that his domicile status may change over time.
– The split year basis applies to Hogan in the tax year 2025/26. You ARE NOT required
to provide an explanation as to why this is the case.
– Hogan will be UK resident in the tax year 2026/27.
Tax system in the country of Baltera
– There is no inheritance tax (IHT) in Baltera.
Please prepare a memorandum for the client file consisting of the work set out below.
(a) Sale of shares in BG Ltd (Exhibit 1)
This sale qualified as a capital disposal, such that it gave rise to a chargeable gain
rather than to taxable income.
Olma’s shareholding in BG Ltd was clearly substantially reduced as a result of the sale
of all of her shares and she is not connected to the company. I can also confirm that
the sale was not carried out as part of a scheme to avoid tax.
– Outline the other conditions which must have been satisfied, such that Olma’s
sale of her shares gave rise to a chargeable gain. (5 marks)
(b) Cafe business (Exhibit 1)
(i) Voluntary registration for the purposes of value added tax (VAT)
Olma and I have already discussed the administration aspects of VAT, including
the various schemes and the penalty regime.
– Explain the additional matters we should draw to Olma’s attention in
order to help her understand the financial advantage(s) and/or
disadvantage(s) of registering voluntarily prior to 1 September 2024.
(8 marks)
(ii) Loss planning

– Explain, with supporting calculations, how Olma’s trading loss could be
offset her income and/or chargeable gains, on the assumption that she
does not wish to carry the trading loss forward.
– Conclude on the most beneficial way of relieving the loss and the tax
which would be saved as a result.
You should ignore national insurance contributions and VAT. (12 marks)
(iii) Introduction of Hogan as a partner
– Explain any issues that would arise for our firm if Hogan enters into a
partnership with Olma and any actions the firm should take.
(5 marks)
(c) Award of free shares from VPR plc’s share incentive plan (SIP) (Exhibit 2)
– State the conditions which must be satisfied IN THE FUTURE in order for there
to be no income tax payable by Hogan in respect of the value of the shares
awarded to him and the dividends paid in respect of them. (3 marks)
(d) Gift of £380,000 to a discretionary trust on 1 July 2026 (Exhibit 2)
– Explain by reference to Hogan’s domicile why this proposed gift will give rise
to a UK IHT liability.
– Calculate the amount of IHT which will be payable by Hogan. (7 marks)
Required:
You should assume that today’s date is 1 February 2025.
(40 marks)
Professional marks will be awarded for demonstration of skill in communication, analysis
and evaluation, scepticism and commercial acumen in your answer. (10 marks)
(Total: 50 marks)
9 HIROMI (ADAPTED) Walk in the footsteps of a top tutor

You are an ACCA student working for a firm of accountants. Your manager has asked for your
assistance in drafting notes in preparation for a meeting with Hiromi in relation to her
personal tax affairs.
In addition to some ethical considerations which have been raised by your manager, advice
is required in respect of:
– the capital gains tax payable on the sale of a property and the sale of business assets,
– the availability of incorporation relief,
– the reliefs available in respect of a trading loss of a sole trader,

– the tax implications of the payment and receipt of a dividend, and

– the records to be kept by a company.
1 Hiromi’s income and chargeable gains
2 Sale of unincorporated business
3 Work to be carried out
Exhibit 1 – Hiromi’s income and chargeable gains
Extract from a memorandum from your manager (dated 1 September 2024) recording
matters discussed in a meeting with Hiromi
Hiromi recently became a client of our firm. Her sources of income and chargeable gains
for recent tax years are summarised below.
Sources of income
Hiromi has been in business as a sole trader since 2015. On 31 December 2024, Hiromi will
incorporate her business by selling all of its assets to a newly formed company called HKR
Ltd. The details of this transaction are set out in the schedule from Hiromi (Exhibit 2).
Hiromi’s tax adjusted trading results for her final two tax years of trading are set out
below.
£
2024/25 (budgeted) – loss (44,500)
2023/24 – profit 8,000
Hiromi’s only other source of income in recent years was a house which she rented out
until she sold it on 28 February 2024 (see below). Hiromi’s assessable property income for
the final two tax years in which she owned the property is:
£
2022/23 19,400
2023/24 15,500
Chargeable gains
Hiromi’s only disposal in recent years was of her rental property on 28 February 2024.
Hiromi sold this house for £265,000. She had inherited it from her uncle on 1 March 2012
when it had a market value of £221,500. Hiromi’s uncle had purchased the house for
£135,000 on 1 September 2005. Hiromi had never lived in the property.
Income tax refund

Hiromi has received an unexpected refund of income tax from HM Revenue and Customs
(HMRC) in respect of the tax year 2020/21.
Exhibit 2 – Sale of unincorporated business

Schedule from Hiromi dated 1 September 2024
Sale of the assets of my business to HKR Ltd
I will sell all of the assets of my business to HKR Ltd for their market values on 31
December 2024. Details of the assets to be sold are set out below.
Goodwill Building Current assets Total

Market value £4,000 £290,000 £21,000 £315,000
Cost £4,000 £118,000 N/A
Chargeable gain 0 £172,000 N/A £172,000
I will receive 50,000 ordinary £1 shares in HKR Ltd (the whole of the company’s issued
share capital). The value of these shares will be £255,000, representing 81% of the total
consideration. The remainder of the consideration will be left on loan account and will be
paid to me in the future.
I will not make any further capital disposals in the tax year 2024/25.
Looking to the future
I expect the turnover of the business to increase considerably in 2025 and 2026. As a
result, HKR Ltd will be able to pay me a salary of £5,500 per month, beginning on 6 April
2025. I will also be paid a dividend of £7,000 each year. The first dividend will be paid on 1
November 2026. HKR Ltd will pay corporation tax at the main rate.
Finally, I require advice on the record keeping requirements which will apply to HKR Ltd in
relation to its business activities.
Extract from email from manager dated 1 September 2024
I need you to prepare some notes for internal use prior to our meeting with Hiromi. The
notes should be set out in a manner which will make it easy for us to refer to them during our
discussions and should address the following issues:
(a) Refund of income tax (Exhibit 1)
Summarise the actions which our firm should take, including the matters which we
should bring to Hiromi’s attention in relation to the refund she has received.
(5 marks)
(b) Chargeable gains (Exhibits 1 and 2)
When carrying out this work in respect of Hiromi’s chargeable gains you should
ignore any relief which may be available to her in respect of her trading loss.
– Calculate the capital gains tax (CGT) payable by Hiromi as a result of the sale
of the rental property on 28 February 2024.
– In respect of the proposed sale of Hiromi’s business assets to HKR
Ltd on 31 December 2024:
– Explain whether or not each of the three conditions for incorporation
relief will be satisfied; and

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ACCA

British Library Cataloguing-in-Publication Data

© Kaplan Financial Limited, 2023

Index to questions and answers P.5

Analysis of past exams P.12

Exam technique P.14

Exam specific information P.16

Kaplan’s recommended revision approach P.22

Kaplan’s detailed revision plan P.27

Tax rates and allowances P.38

Time limits and election dates P.43

2 Practice questions – Section B 81

3 Answers to practice questions – Section A 165

4 Answers to practice questions – Section B 407

5 Specimen exam questions 681

6 Answers to specimen exam 691

K APLAN P UBLI S H I N G P.3

Key features in this edition

KEY TO THE INDEX

Key answer tips

Tutor’s top tips

KAPLAN P UBLI S H I N G P.5

2 Ziti 6 177 Jun 14 (A)

3 Jonny 9 193 Sept/Dec 15 (A)

4 Ray, Shanira and Kelly 12 202 Mar/Jun 16 (A)

5 Pippin 16 214 Mar/Jun 17 (A)

6 Maia 19 225 Mar/Jun 19 (A)

7 Joe and Fiona 23 234 Mar/Jun 21 (A)

8 Olma and Hogan 27 245 Mar/Jun 22 (A)

9 Hiromi 30 256 Mar/Jun 23 (A)

KAPLAN P UBLI S H I N G P.7

TAXATION OF CORPORATE BUSINESSES

Drench, Paprikash, Hail Ltd Jun 10 and

12 Janus plc Group 41 297 Jun 12 (A)

13 Sprint Ltd and Iron Ltd 45 309 Sept/Dec 15 (A)

14 Hahn Ltd Group 48 319 Sept/Dec 16 (A)

18 Grand Ltd Group 65 359 Sept 18 (A)

19 Plad Ltd and Quil Ltd 69 372 Mar/Jun 19 (A)

20 Jeg Ltd Group 74 382 Sept/Dec 21 (A)

21 Hum Ltd Group 77 397 Sept/Dec 22 (A)

22 Morice and Babeen plc 81 407 Dec 11 (A)

23 Hyssop Ltd 83 414 Sept/Dec 15 (A)

24 Methley Ltd 84 421 Sept/Dec 16 (A)

25 Damiana plc 86 426 Sept/Dec 17 (A)

26 Demeter 88 431 Dec 18 (A)

27 Yacon Ltd and Daikon 90 435 Mar/Jun 21 (A)

28 Amy and Bex 92 439 Mar/Jun 16 (A)

29 Meg and Laurie 93 444 Sept/Dec 17 (A)

30 Rod 95 449 Mar/Jun 19 (A)

31 Tomas and Ines 97 453 Mar 20 (A)

32 Yaqui 98 457 Sept/Dec 22 (A)

Changing business scenarios

33 Desiree 100 463 Jun 10 (A)

34 Enid 102 468 Sept 18 (A)

36 Sabin and Patan Ltd 106 477 Sept/Dec 21 (A)

37 Joan Ark 107 483

40 Ash 112 501 Dec 12 (A)

41 Pescara 114 507 Dec 13 (A)

42 Cada 115 515 Dec 14 (A)

43 Eric 117 521 Mar/Jun 16 (A)

44 Liber 119 527 Dec 18 (A)

45 Anya 120 533 Mar/Jun 23

Multi tax personal including overseas

46 Mirtoon 122 540 Dec 11 (A)