business-reporting-july-2010-marks-plan

Spaceway could carry the unused surplus management

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Spaceway could carry the unused surplus management expenses forward against future profits.
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TI BR – Advanced Stage – July 2010 © The Institute of Chartered Accountants in England and Wales 2010 10 Given no further information a group claim would appear to be effective since Pepper Art is paying at the marginal rate of tax. Additional information required to complete the review Confirmation that claim for 4% WDA on goodwill has not been made There may be acquisition costs in respect of Prospect House which would be allowed as a deduction in calculating the chargeable gain. More detail on the future profits of Spaceway to assess whether claim for group relief is more or less effective than a carry forward of the loss. Software support charges – need to obtain evidence of this expense. We will need to review the capital allowances computation and review tax sensitive accounts such as repairs and renewals, legal expenses etc. Attachment 2 VAT implications of purchase of Star House by Spaceway It is important to examine the tax history of this building to appreciate whether there are any future liabilities for Spaceway. Star House was a newly constructed property and CartoonGo would have suffered input VAT of £210,000. The recoverability of this input VAT would have been determined by the initial use of the building which was exclusively business. Therefore CartoonGo would have recovered £210,000 input VAT. However, as the building cost more than £250,000, it will be subject to the capital goods scheme. No capital goods scheme adjustments would be required for the year ended 31 May 2007 or 2008 since the use remained business. However an adjustment, i.e. repayment of input tax to HMRC, would be required for the year ended 31 May 2009 of £210,000/10 x (33 - 100%) = £14,000. The same adjustment will be made for the year ended 31 May 2010 and a further £14,000 would be payable to HMRC by CartoonGo. If Spaceway buys the property with tenants occupying the property, it will constitute a transfer of a going concern (TOGC). The property is commercial (not residential) and more than three years old and no option to tax was made by CartoonGo Therefore there is no requirement for Spaceway to opt to tax for the property to be included in the TOGC (i.e. the transfer is not subject to VAT). Spaceway is not occupying the premises for its own business purposes. The rental charges to CartoonGo and the Insurance company will be exempt supplies. Therefore the adjustment for each of the remaining 6 intervals will be: £210,000/10 x (0% x 100%) = £21,000 Therefore a total payment to HMRC of £21,000 x 6 = £126,000 will be made by Spaceway over the remaining 6 years. Spaceway needs to consider this potential liability in negotiating the price for Star House.
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TI BR – Advanced Stage – July 2010 © The Institute of Chartered Accountants in England and Wales 2010 11 Briefing note to Tax Partner Subject: Ethical implications for the firm arising from Jim Jones’s email Over repayment by HMRC of tax of £207,000
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  • Fall '09
  • NEUGEBOREN
  • Income Statement, Wales, The Institute of Chartered Accountants

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