Answer one:
| Particulars | Amount £ | Amount £ |
| Capital gain / (loss) on sale of piano | ||
| Sale proceeds | 2,000.00 | |
| Less: Cost | 10,000.00 | |
| (8,000.00) | ||
| Capital gain / (loss) on sale of vintage car | ||
| Sale proceeds from sale car | 55,000.00 | |
| Less: Selling costs | 1,000.00 | |
| Net sale proceeds | 54,000.00 | |
| Less: Cost | 35,000.00 | |
| 19,000.00 | ||
| Capital gain / (loss) on sale of land | ||
| Sale proceeds | 1,50,000.00 | |
| Less: Proportionate cost of the land (160000 x 34%) | 54,400.00 | |
| 95,600.00 | ||
| Capital gain / (loss) on sale of oil painting | ||
| Sale proceeds | 10,200.00 | |
| Less; Selling costs | 1,020.00 | |
| Net sale proceeds | 9,180.00 | |
| Less: Cost base | 5,500.00 | |
| 3,680.00 | ||
| Net capital gain | 1,10,280.00 | |
| Capital gain tax @28% | 30,878.40 |
Thus, capital gain tax liability is £30,878.40
Answer two:
| Taxable income and tax liability of Rihan | ||
| Particulars | Amount (£) | Amount (£) |
| Gross salary | 70,000.00 | |
| Mileage allowance is not taxable | ||
| 70,000.00 | ||
| Income from savings is exempt | – | |
| Dividend income is exempt | – | |
| Gross taxable income before personal allowance | 70,000.00 | |
| Less: Personal allowance | 12,500.00 | |
| net taxable income | 57,500.00 | |
| tax liability | ||
| Basic rate @20% up to 50000 | 10,000.00 | |
| Higher rate of @40% additional 7500 | 3,000.00 | |
| 13,000.00 | ||
| Tax deducted by employer | 15,800.00 | |
| Tax refundable to Rihan | 2,800.00 |
Hence, tax refundable to Rihan is £2,800.
Taxable income and tax liability Robert
| Taxable income and tax liability Robert | ||
| Particulars | Amount (£) | Amount (£) |
| Income from profession | 19,500.00 | |
| Protective clothing provided by employer | 900.00 | |
| Interest from savings account is exempt | ||
| Prize money won from premium bonds | 150.00 | |
| Gross taxable income before personal allowance | 20,550.00 | |
| Less: Personal allowance | 12,500.00 | |
| net taxable income | 8,050.00 | |
| tax liability | ||
| Basic rate @20% up to 50000 | 1,610.00 | |
| Tax deducted by employer | 1,205.00 | |
| Tax due from Robert | 405.00 |
Hence, tax due from Robet is £405.
Answer three:
Part i:
VAT return for quarter ending 30 September, 2019:
| Particulars | Amount £ | Amount £ |
| Sales invoice | 3,45,000.00 | |
| Less: Written off debt | 3,000.00 | |
| 3,42,000.00 | ||
| Less: Discount (175000 x 5%) | 8,750.00 | |
| Sales for VAT purchases | 3,33,250.00 | |
| VAT on output sales | 66,650.00 | |
| Less: Input VAT | ||
| Standard rate for purchases | 22,320.00 | |
| VAT on expenses | 2,680.00 | |
| VAT on car (12700 x 80%) x 20% | 2,032.00 | |
| 27,032.00 | ||
| Net VAT Liability | 39,618.00 |
VAT Liability is £39,618.
The VAT liability of £39,618 must be remitted to HMRC on or before October 7, 2019.
Part ii:
Yes, there are options to Lola to reduce the time required for VAT return filling as there is an option to file annual AT return instead of monthly and quarterly returns. By applying for annual VAT return and filling Lola will be able to save the time she is investing on filling and maintaining quarterly VAT returns.
Answer four:
Part a:
All amounts are in £
| Opening balance | Additions | Disposals | |
| 01-04-2018 | 44,800.00 | ||
| 31-07-2018 | 48,500.00 | ||
| 31-08-2018 | 15,900.00 | ||
| 26-02-2019 | 19,000.00 | ||
| 02-03-2019 | 18,400.00 | ||
| 18-03-2019 | 18,900.00 | ||
| 44,800.00 | 1,01,700.00 | 19,000.00 | |
| Total capital allowance | 14,347.50 |
Hence, capital allowance allowed is £14,347.50.
Part b:
Calculation of trading income for all the tax years:
| Particulars | Amount £ |
| Tax year for year ending 5 April, 2021 | 29,293.18 |
| Tax year for year ending 5 April, 2022 | 42,203.43 |
| Tax year for year ending 5 April, 2023 | 49,000.25 |
| Tax year for year ending 5 April, 2024 | 56,501.92 |
| Tax year for year ending 5 April, 2025 | 84,971.23 |
