ACCA
Applied Skills
Taxation (TX‐UK) (Finance Act 2019)
EXAM KIT
For June 2020 to March 2021 examination sittings
TX–UK : TAXATION (FA2019)
P.2 KAPLAN PUBLISHING
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: 978‐1‐78740‐416‐8
© Kaplan Financial Limited, 2019.
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 any person in respect of any losses or other claims, whether direct, indirect, incidental, 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
These materials are reviewed by the ACCA examining team. The objective of the review is to ensure that the material properly covers the syllabus and study guide outcomes, used by the examining team in setting the exams, in the appropriate breadth and depth. The review does not ensure that every eventuality, combination or application of examinable topics is addressed by the ACCA Approved Content. Nor does the review comprise a detailed technical check of the content as the Approved Content Provider has its own quality assurance processes in place in this respect.
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 examiners themselves and have been adapted by Kaplan Publishing.
KAPLAN PUBLISHING P .3
CONTENTS Page
Index to questions and answers P.5
Analysis of past exams P.15
Exam technique P.19
Exam specific information P.23
Kaplan’s recommended revision approach P.27
Kaplan’s TX examination revision plan P.29
Tax rates and allowances P.39
Time limits and election dates P.45
Section
1 Practice income tax and national insurance questions 1
2 Practice chargeable gains questions 77
3 Practice inheritance tax questions 109
4 Practice corporation tax questions 129
5 Practice value added tax questions 177
6 Answers to practice income tax and national insurance questions 205
7 Answers to practice chargeable gains questions 389
8 Answers to practice inheritance tax questions 455
9 Answers to practice corporation tax questions 497
10 Answers to practice value added tax questions 593
11 Specimen exam questions 629
12 Answers to specimen exam questions 643
TX–UK : TAXATION (FA2019)
P.4 KAPLAN PUBLISHING
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 recent examinations.
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.
A wealth of past real examination questions adapted to the new examination style with enhanced tutorial answers and 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/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 [email protected] with full details, or follow the link to the feedback form in MyKaplan.
Our Quality Coordinator will work with our technical team to verify the error and take action to ensure it is corrected in future editions.
KAPLAN PUBLISHING P.5
INDEX TO QUESTIONS AND ANSWERS INTRODUCTION
All TX exams have been computer‐based exams (CBEs) from the June 2019 sitting, if you would like further information on sitting a CBE TX examination please contact either Kaplan or the ACCA.
As a result of changes to the TX exam format over time, the majority of past exam questions in their original format are not representative of current TX examination questions. The questions contained in this exam kit are therefore based on past exam questions but it has been necessary to adapt them to ensure that they are representative of questions in the examinations. The adaptations have been made to reflect the new style of exam, new legislative changes in recent Finance Acts, Tax law changes and IFRS® Standards terminology. We have also included new topics brought into the syllabus in some questions.
Many of the questions within the kit are past ACCA exam questions, and the more recent questions (from 2005) are labelled as such in the index. Note that if a question within this kit has been adapted or 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 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’ you should assume that this also applies to the marking scheme.
A number of questions included in the exam kit are referenced to two examination sittings e.g. March/June 2017. This is as a result of a change in policy made by the ACCA regarding the release of examination questions. Previously, examinations were released in their entirety. The ACCA now release a selection of questions from the March/June and September/December examinations. Therefore, questions referenced as such are taken from the sample released by the ACCA.
TX–UK : TAXATION (FA2019)
P.6 KAPLAN PUBLISHING
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 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.
Within the questions in the exam kit you will see the following icons, shown in the question requirements:
= word processing
= spreadsheet
The icons highlighting the constructed response workspace tool alongside some of the questions are for guidance only – it is important to recognise that each question is different and that the answer space provided by ACCA in the exam is determined by both the technical content of the question as well as the quality assurance processes ACCA undertakes to ensure the student is provided with the most appropriate type of workspace.
INDEX TO QUESTIONS AND ANSWERS
KAPLAN PUBLISHING P.7
ONLINE ENHANCEMENTS
Question 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
points out how to approach the question
advises you how to ensure that the easy marks are obtained as quickly as possible, and
emphasises how to tackle exam questions and exam technique.
These questions are indicated with the ‘clock’ icon in the index.
Online question enhancements and answer debriefs will be available on MyKaplan at:
www.mykaplan.co.uk
TX–UK : TAXATION (FA2019)
P.8 KAPLAN PUBLISHING
PRACTICE INCOME TAX AND NATIONAL INSURANCE QUESTIONS Page number
Question Answer Past exam (Adapted)
SECTION A OBJECTIVE TEST QUESTIONS 1 205
SECTION B OBJECTIVE TEST CASES
Income tax basics and employment income
89 Philip & Charles
27 240 Dec 11 (A)
90 Kim Baxter
29 243 Jun 08 (A)
Income tax basics and income from self‐employment
91 Foo Dee 31 246 Dec 06 (A)
SECTION C CONSTRUCTED RESPONSE QUESTIONS
Income tax basics and employment income
92 Array Ltd
33 247 Dec 16 (A)
93 Martin
34 251 Sep/Dec 18 (A)
94 Kaya
36 255 Mar/Jun 18
95 Patience
37 258 Mar/Jun 16 (A)
96 Alimag
38 262 Sep/Dec 17
97 Dill
39 265 Sep/Dec 17
98 Richard Tryer
41 269 Jun 14 (A)
99 Petula
42 273 Mar/Jun 17 (A)
Income tax basics and income from self‐employment
100 Carol Courier 44 277 (A)
101 Idris Williams
45 279
102 Ethel 46 282
103 Sam White
47 286 Jun 08 (A)
104 George
48 289 Mar/Jun 16 (A)
105 Sophia Wong
49 292 Dec 12 (A)
106 Fergus
50 298 Jun 15
107 Dembe 50 300 Mar/Jun 19(A)
108 Fang, Hong and Kang
42 302 Dec 13
109 Na Style
53 307 Dec 09 (A)
INDEX TO QUESTIONS AND ANSWERS
KAPLAN PUBLISHING P.9
Page number
Question Answer Past exam (Adapted)
Income tax basics and income from self‐employment
110 Zhi
53 311 Mar/Jun 17 (A)
111 Tim Burr
55 314 Jun 11 (A)
112 Richard Feast
56 318 Dec 13 (A)
113 Tonie 58 322 Mar/Jun 19 (A)
114 Danh
59 325 Mar/Jun 18
Trading losses
115 Norma 61 328 (A)
116 Ashura
62 332 Sep 16 (A)
117 Dee Zyne
63 335 Jun 05 (A)
118 Samantha Fabrique
64 337 Dec 07 (A)
119 Michael and Sean
64 341 Jun 12
Partnerships
120 Peter, Quinton and Roger
66 346 (A)
121 Ae, Bee, Cae and Dee
66 348 Dec 08 (A)
122 Auy Man and Bim Men
67 351 Jun 10 (A)
123 Daniel, Francine and Gregor
69 357 Sept/Dec 15
Pensions and NIC
124 John Beach
70 360 Jun 13 (A)
125 Kat
71 366 Sep/Dec 18 (A)
126 Ann, Basil and Chloe
71 370 Dec 08 (A)
127 Jack
72 375 Dec 16 (A)
Self‐assessment
128 Pi Casso 73 379 Jun 08 (A)
129 Ernest Vader
74 383 Jun 10 (A)
130 Sophie Shape
75 386 Jun 15 SP (A)
TX–UK : TAXATION (FA2019)
P.10 KAPLAN PUBLISHING
PRACTICE CHARGEABLE GAINS QUESTIONS Page number
Question Answer Past exam (Adapted)
SECTION A OBJECTIVE TEST QUESTIONS 77 389
SECTION B OBJECTIVE TEST CASES
Individuals – capital gains tax
163 Michael Chin 87 404 Jun 05 (A)
164 Bo 89 407 Dec 09 (A)
165 Alphabet Ltd
90 410 Jun 11 (A)
166 Jorge Jung 92 412 Dec 11 (A)
167 Albert and Charles
93 414 Dec 13 (A)
168 Zoyla
95 417 Dec 16 (A)
169 Hali and Goma 96 418 Mar/Jun 19 (A)
Companies – chargeable gains
170 Hawk Ltd
98 420 Dec 08 (A)
171 Kat Ltd
100 423 Sep 16 (A)
SECTION C CONSTRUCTED RESPONSE QUESTIONS
Individuals – capital gains tax
172 David and Angela Brook
102 426 Dec 07 (A)
173 Bill Ding
103 530
174 Jerome
103 433 Mar/Jun 16 (A)
175 Ginger and Nigel
104 436 Jun 13 (A)
176 Mick Stone
105 440 Jun 14 (A)
177 Ruby
105 443 Sept/Dec 15 (A)
178 Daljeet
106 446
Companies – chargeable gains
179 Forward Ltd 107 449 (A)
180 Luna Ltd
108 451 Jun 15
INDEX TO QUESTIONS AND ANSWERS
KAPLAN PUBLISHING P.11
PRACTICE INHERITANCE TAX QUESTIONS Page number
Question Answer Past exam (Adapted)
SECTION A OBJECTIVE TEST QUESTIONS 109 455
SECTION B OBJECTIVE TEST CASES
200 Lebna and Lulu 115 463 Mar/Jun 19 (A)
201 Tom
117 465 Dec 12 (A)
202 Afiya
119 468 Dec 13 (A)
203 Roman
120 471 Dec 16 (A)
204 Adana
122 473 Sep 16 (A)
SECTION C CONSTRUCTED RESPONSE QUESTIONS
205 Blu
124 475 Dec 11 (A)
206 Jack and Tom
125 479 Dec 12 (A)
207 Pere Jones
125 482 Jun 13 (A)
208 Kendra Older
126 486 Jun 14 (A)
209 James
127 489 Mar/Jun 16 (A)
210 Marcus
128 493 Sept/Dec 2015
PRACTICE CORPORATION TAX QUESTIONS Page number
Question Answer Past exam (Adapted)
SECTION A OBJECTIVE TEST QUESTIONS 129 497
SECTION B OBJECTIVE TEST CASES
Corporation tax basics and administration
246 Greenzone Ltd
141 513 Jun 13 (A)
Relief for trading losses
247 Loser Ltd 143 516 Pilot 07 (A)
With group aspects
248 Deutsch Ltd
145 519 Jun 13 (A)
TX–UK : TAXATION (FA2019)
P.12 KAPLAN PUBLISHING
Page number
Question Answer Past exam (Adapted)
SECTION C CONSTRUCTED RESPONSE QUESTIONS
Corporation tax basics and administration
249 Tenth Ltd and Eleventh Ltd
146 522 Sep 16 (A)
250 Aoede Ltd, Bianca Ltd and Charon Ltd 147 525 Mar/Jun 19 (A)
251 Solo Ltd
149 529 Mar/Jun 18 (A)
252 Online Ltd
150 534 Mar/Jun 17 (A)
253 Stretched Ltd 152 537 Jun 05 (A)
254 Starfish Ltd
152 539 Dec 11 (A)
255 Heavy Ltd
154 544 Jun 12 (A)
256 Softapp Ltd
156 547 Dec 13 (A)
257 E‐Commerce plc
158 552 Dec 14 (A)
258 Lucky Ltd
160 556 Sept/Dec 15
Relief for trading losses
259 Last Orders Ltd 161 561 Sep/Dec 17 (A)
260 Wretched Ltd
163 565 Dec 16 (A)
261 Retro Ltd
165 568 Jun 15
With group aspects
262 Music plc 167 573 Dec 05 (A)
263 Jump Ltd 168 575 Mar/Jun 16 (A)
264 Ash Ltd
170 579 Sep/Dec 18 (A)
265 Clueless Ltd
172 583 Dec 12 (A)
266 Long Ltd and Road Ltd
175 588 Jun 14 (A)
INDEX TO QUESTIONS AND ANSWERS
KAPLAN PUBLISHING P.13
PRACTICE VALUE ADDED TAX QUESTIONS Page number
Question Answer Past exam (Adapted)
SECTION A OBJECTIVE TEST QUESTIONS 177 593
SECTION B OBJECTIVE TEST CASES
288 Thidar 184 599 Mar/Jun 19 (A)
289 Candy Apple and Sugar Plum
186 601 Dec 13 (A)
290 Lithograph Ltd 188 603 Jun 06 (A)
291 Alisa
190 605 Sep 16 (A)
292 The Whitlock Sisters
191 607 Jun 12 (A)
293 Knight Ltd
193 609 Jun 13 (A)
294 Ardent Ltd
195 612 Dec 16 (A)
SECTION C CONSTRUCTED RESPONSE QUESTIONS
295 Garfield
197 614 Mar/Jun 16 (A)
296 Victor Style 198 616 (A)
297 Denzil Dyer 199 618 Jun 07 (A)
298 Silverstone Ltd
200 619 Dec 12 (A)
299 Tardy plc
200 620 Dec 14
300 Smart Ltd
201 623 Sept/Dec 15
301 Zia
202 625 Jun 15
KAPLAN PUBLISHING P.15
ANALYSIS OF PAST EXAMS The table below summarises the key topics that have been tested in recent exams.
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.
* Refers to topics that were included in the question when originally set, but with the adaptation of the question to the new style exam, this topic element has been removed from this question in the exam kit.
Mar/Jun 2016
Sep 2016
Dec 2016
Mar/Jun 2017
Sep/Dec 2017
Mar/Jun 2018
Sep/Dec 2018
Mar/Jun 2019
Principles of taxation/Ethics
Extra statutory concession Q75
Direct tax Q71
Income tax
Exempt income Q97 Q113
Basic income tax computation
Q95 Q104
Q16 Q96 Q94 Q114
Q125
Savings income Q99 Q93 Q113
Dividend income Q96 Q94 Q125 Q93
Reduction of personal allowance
Property income Q95 Q20 Q99 Q114 Q125 Q93
Q113
Furnished holiday lettings
ISAs Q127
Residence Q13 Q10 Q97 Q114 Q113
Qualifying interest Q99 Q114
Employed individual
Employed vs. self‐employed Q104 Q113
Salary and bonus Q95 Q116 Q99 Q97 Q94 Q93 Q113
Exempt benefits Q95 Q92 Q97
Car and fuel benefit Q92 Q93
Living accommodation
Payroll giving Q93
Beneficial loan Q95 Q92 Q97 Q93
Use/gift of assets Q30 Q92 Q97 Q93
Mileage allowance Q116 Q99 Q97 Q113
Professional subscriptions Q116 Q99 Q97
Removal expenses Q92
TX–UK : TAXATION (FA2019)
P.16 KAPLAN PUBLISHING
Mar/Jun 2016
Sep 2016
Dec 2016
Mar/Jun 2017
Sep/Dec 2017
Mar/Jun 2018
Sep/Dec 2018
Mar/Jun 2019
Self‐employed individual
Adjustment to profits Q116 Q114
Capital allowances Q95 Q116 Q114
Basis of assessment rules Q95
Partnerships – allocation Q114 Q93
Tax planning Q110
Pensions
Pension income
Occupational pension Q95 Q116 Q99 Q97
Personal pension contributions
Q95 Q64 Q116
Q127 Q107
Annual allowance Q64 Q127 Q99 Q97
Income tax losses
Relief against income Q116 Q97 Q114
Opening year loss relief Q116
National Insurance contributions
Class 1 Q104 Q96 Q94
Class 1A Q92
Class 2 Q104
Class 4 Q104 Q57 Q61
Capital gains
Basic CGT computation Q95 Q174
Q171
Exempt assets Q169
Part disposal Q174
Shares Q171 Q157 Q168
Q169
Wasting asset Q140
Insurance for destroyed assets
Q169
Husband and wife Q174 Q134 Q169 Q107
Capital losses Q169
Planning Q168 Q107
Reliefs
Entrepreneurs’ relief Q168 Q169
Principal private residence relief
Q149
Gift relief Q174 Q157
Rollover relief Q171 Q110
ANALYSIS OF PAST EXAMS
KAPLAN PUBLISHING P.17
Mar/Jun 2016
Sep 2016
Dec 2016
Mar/Jun 2017
Sep/Dec 2017
Mar/Jun 2018
Sep/Dec 2018
Mar/Jun 2019
Self‐assessment – individual
Payments on account Q85 Q110
Compliance checks Q93
Interest and penalties Q87 Q93
Record retention Q79
Inheritance tax
PETs Q209 Q182 Q184
Q200
CLTs Q209 Q184
Q203
Exemptions Q209 Q203 Q200
Diminution in value Q203
Estate computation Q204 Q193
After tax inheritance
Reduction of tax Q209 Q204
Due dates Q204 Q203 Q200
Transfer of nil rate band Q204 Q199 Q200 Q107
Residence nil rate band Q200 Q107
Corporation tax
Residence Q260 Q264
Definition of accounting periods
Q264
Adjustment to profits Q263 Q214 Q249
Q260 Q252 Q259 Q251 Q264 Q250
Capital allowances Q263 Q249 Q260 Q252 Q259 Q251 Q250
Lease premiums Q249 Q260 Q252 Q251
Basic TTP computation Q252 Q96 Q259
Q251 Q264 Q250
Property income Q249 Q221 Q260
Q259 Q251
Interest income
Chargeable gains Q171 Q249
Q252
Q259 Q251 Q264 Q250
Long period of account
Qualifying donations Q249 Q252
Q259 Q251 Q264 Q250
Corporation tax losses
Capital losses Q260 Q252
Q264 Q250
Trading losses Q263 Q222 Q260 Q259 Q251 Q264 Q250
Property losses Q260 Q252
TX–UK : TAXATION (FA2019)
P.18 KAPLAN PUBLISHING
Mar/Jun 2016
Sep 2016
Dec 2016
Mar/Jun 2017
Sep/Dec 2017
Mar/Jun 2018
Sep/Dec 2018
Mar/Jun 2019
Groups
Group relief Q263 Q259 Q264 Q250
Capital gains group Q231
Group structure planning
Self‐assessment – companies
Quarterly instalments Q218 Q252
Compliance check Q212
Value added tax
Registration Q291 Q294 Q288
VAT return computation Q295 Q294
Tax point Q110
Due dates Q291 Q294
VAT invoices Q291 Q288
Default surcharge Q294
Errors in a VAT return Q288
Pre‐registration input VAT Q288
Annual accounting scheme Q295 Q283
Cash accounting scheme Q295
Input VAT recovery Q277 Q294
Q288
KAPLAN PUBLISHING P.19
EXAM TECHNIQUE
GENERAL COMMENTS
We recommend that you always read the questions and examination requirements carefully.
Divide the time you spend on questions in proportion to the marks on offer:
– one suggestion for this examination is to allocate 1.8 minutes to each mark available (180 minutes/100 marks), so a 10 mark question should be completed in approximately 18 minutes.
– within that, try to allow time at the start to read the question and plan your answer (see P.24 below) and at the end of each question to review your answer and address any obvious issues.
If you get completely stuck with a question:
– flag the question in the CBE software and return to it later.
Spend the last five minutes of the examination:
– reading through your answers, and
– making any additions or corrections.
SECTION A OBJECTIVE TEST QUESTIONS
Decide whether you want to attempt these at the start of the examination or at the end.
Stick to the timing principle of 1.8 minutes per mark. This means that the 15 OT questions in section A (30 marks) should take 54 minutes.
No credit for workings will be given in these questions; the answers will either be correct (2 marks) or incorrect (0 marks).
Work steadily. Rushing leads to careless mistakes and questions are designed to include answers that result from careless mistakes.
If you don’t know the answer, eliminate those options you know are incorrect and see if the answer becomes more obvious.
Remember that there is no negative marking for an incorrect answer. After you have eliminated the options that you know to be wrong, if you are still unsure, guess.
SECTION B OT CASE QUESTIONS
There is likely to be a significant amount of information to read through for each case. You should begin by reading the OT questions that relate to the case, so that when you read through the information for the first time, you know what it is that you are required to do.
Each OT question is worth two marks. Therefore you have 18 minutes (1.8 minutes per mark) to answer the five OT questions relating to each case. It is likely that all of the cases will take the same length of time to answer, although some of the OT questions within a case may be quicker than other OT questions within that same case.
TX–UK : TAXATION (FA2019)
P.20 KAPLAN PUBLISHING
Once you have read through the information, you should first answer any of the OT questions that do not require workings and can be quickly answered. You should then attempt the OT questions that require workings utilising the remaining time for that case.
All of the tips for section A are equally applicable to each section B question.
SECTION C CONSTRUCTED RESPONSE (LONG) QUESTIONS
The constructed response questions in section C will require a written response rather than being OT questions. Therefore, different techniques need to be used to score well.
Unless you know exactly how to answer the question, spend some time planning your answer. Stick to the question and tailor your answer to what you are asked. Pay particular attention to the verbs in the question e.g. 'Calculate', 'State', 'Explain'.
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. Your answer should:
– have a clear structure
– be concise.
It is better to write a little about a lot of different points than a great deal about one or two points.
Section C Computations:
– It is essential to include all your workings in your answers. Many computational questions require the use of a standard format e.g. income tax computations, corporation tax computations and capital gains.
– Be sure you know these formats thoroughly before the examination and use the layouts that you see in the answers given in this book and in model answers.
– Adopt a logical approach and cross reference workings to the main computation to enable the marker to find them easily. Do not leave a large gap between your answer and the workings.
– You will be presented with a blank spreadsheet. A number of standard spreadsheet functions are available via the menu and tool bar for you to use when responding to the question. It is important to practise answering questions using the CBE software and to familiarise yourself with the CBE functionality, particularly the spreadsheet functions.
Section C 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.
EXAM TECHNIQUE
KAPLAN PUBLISHING P.21
ADDITIONAL TIPS
Do not attempt a CBE until you have completed all study material relating to it.
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 examination.
There is an additional constructed response (CR) workspace on the ACCA website which you can use to practice questions from this exam kit in a CBE environment.
Be sure you understand how to use the software before you start the examination. 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.
In addition to multiple choice type questions, CBEs will also contain other types of questions. You need to be sure you know how to answer questions of these types before you sit the examination, through practice. The types of objective test questions you could see in your CBE are as follows:
Question type Description Example exam kit
question
Multiple choice Select one correct answer from a choice of four
2
Multiple response Select a given number of correct answers
31
Fill in the blank Input a numerical answer 3
Drag and drop Match chosen answer to chosen areas of the screen
145
Drop down list Select one correct answer from a drop down list
156
Hot area Select one or more areas in an image as a correct answer (e.g. true or false)
1
KAPLAN PUBLISHING P.23
EXAM SPECIFIC INFORMATION
THE EXAM
FORMAT OF THE EXAM The exam will be in THREE sections, and will be predominantly computational.
Section A will consist of 15 objective test questions, each worth 2 marks.
Section B will consist of three 10 mark questions which each comprise five objective test questions of 2 marks each.
Section C will consist of one 10 mark question and two 15 mark questions.
All questions are compulsory.
Number of marks Section A: 15 objective test questions of 2 marks each 30 Section B: Three 10 mark questions covering any area of the syllabus 30 Section C: One 10 mark question covering any area of the syllabus 10 Two 15 mark questions, one focusing on income tax and one on corporation tax 30 ––– Total 100 ––– The CBE will be 3 hours long and students will have up to 10 minutes to familiarise themselves with the CBE system before starting the exam.
Note that:
Section A and section B questions can be drawn from any area of the syllabus.
The two 15 mark section C questions could include a small number of marks in respect of other taxes.
There is no set order for the section C questions. In the specimen exam the 10 mark question appeared before the 15 mark questions, but the examining team could change the order.
PASS MARK
The pass mark for all ACCA Qualification examinations is 50%.
TX–UK : TAXATION (FA2019)
P.24 KAPLAN PUBLISHING
SUGGESTED APPROACH TO THIS EXAM
Decide in advance whether you will attempt section A, B or C first so that you are not wasting time on this decision in the real examination.
This is a personal choice and you have time on the revision phase to try out different approaches, for example, if you sit mock examinations.
A common approach is to tackle the short section A questions first, so they are out of the way, then section B and finally the longer constructed response questions in section C.
Others may prefer to tackle the longer section B and C questions first, as they will take longer than the individual questions in section A.
You should complete at least one mock examination under examination conditions to try out your chosen approach in advance.
Whatever your approach though, you must make sure that you leave enough time to attempt all questions fully and be very strict with yourself in timing each question.
READING AND PLANNING
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 questions carefully, particularly in sections B and C, where questions will be based on longer scenarios than the 2 mark OTs in section A.
Whatever happens, always keep your eye on the clock and do not over run on any part of any question!
As all questions are compulsory, there are no decisions to be made about choice of questions, other than in which order you would like to tackle them.
Therefore, in relation to TX we recommend that you take the following approach to planning your answers:
Note down the amount of time you should spend on each part of each question.
Decide the order in which you think you will attempt each question in sections B and C:
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 questions first, or conversely leave them to the last.
It is usual however for students to 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 section C 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.
For section C computational questions:
Note key numbers/information and key words in the question, scribble notes to yourself to remember key points in your answer.
Jot down pro formas required if applicable.
EXAM SPECIF IC INFORMATION
KAPLAN PUBLISHING P.25
For section C 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 financial 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 section C 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, writing down due dates of payment of tax, due dates for making elections, laying out basic pro formas correctly.
Make sure that you do these parts first when you tackle the question.
As mentioned in the ‘Exam Technique’ section earlier, you should decide in advance of the real examination whether to attempt section A, B or C first.
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/en/student.html
KAPLAN PUBLISHING P.39
TAX RATES AND ALLOWANCES Tax rates and allowances will be produced in the examination for TX for the June 2020 to March 2021 sittings which will contain the following information.
SUPPLEMENTARY INSTRUCTIONS
1 Calculations and workings need only be made to the nearest £.
2 All apportionments should be made to the nearest month.
3 All workings should be shown in Section C.
INCOME TAX
Normal rates
Dividend
rates
Basic rate £1 – £37,500 20% 7.5%
Higher rate £37,501 – £150,000 40% 32.5%
Additional rate £150,001 and over 45% 38.1%
Savings income nil rate band – Basic rate taxpayers £1,000
– Higher rate taxpayers £500
Dividend nil rate band £2,000
A starting rate of 0% applies to savings income where it falls within the first £5,000 of taxable income.
Personal allowance
Personal allowance £12,500
Transferable amount £1,250
Income limit £100,000
Where adjusted net income is £125,000 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
TX–UK : TAXATION (FA2019)
P.40 KAPLAN PUBLISHING
Child benefit income tax charge
Where income is between £50,000 and £60,000, the charge is 1% of the amount of child benefit received for every £100 of income over £50,000.
Car benefit percentage
The relevant base level of CO2 emissions is 95 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:
50 grams per kilometre or less 16% 51 grams to 75 grams per kilometre 19% 76 grams to 94 grams per kilometre 22% 95 grams per kilometre 23%
Car fuel benefit
The base figure for calculating the car fuel benefit is £24,100.
Company van benefits
The company van benefit scale charge is £3,430, and the van fuel benefit is £655.
Individual Savings Accounts (ISAs)
The overall investment limit is £20,000.
Property income
Basic rate restriction applies to 75% of finance costs relating to residential properties.
Pension scheme limits
Annual allowance £40,000
Minimum allowance £10,000
Income limit £150,000
The maximum contribution that can qualify for tax relief without any earnings is £3,600.
Approved mileage allowance: cars
Up to 10,000 miles 45p Over 10,000 miles 25p
TAX RATES AND ALLOWANCES
KAPLAN PUBLISHING P.41
Capital allowances: rates of allowance
Plant and machinery Main pool 18% Special rate pool 6% Motor cars New cars with CO2 emissions up to 50 grams per kilometre 100% CO2 emissions between 51 and 110 grams per kilometre 18% CO2 emissions over 110 grams per kilometre 6% Annual investment allowance Rate of allowance 100% Expenditure limit £1,000,000
Cash basis
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
Rate of tax – Financial year 2019 19%
– Financial year 2018 19%
– Financial year 2017 19%
Profit threshold £1,500,000
VALUE ADDED TAX
Standard rate 20%
Registration limit £85,000
Deregistration limit £83,000
TX–UK : TAXATION (FA2019)
P.42 KAPLAN PUBLISHING
INHERITANCE TAX: nil rate bands and tax rates
Nil rate band £325,000
Residence nil rate band £150,000
Rate of tax on excess – Lifetime rate 20%
– Death rate 40%
Inheritance tax: taper relief
Years before death
Percentage reduction
More than 3 but less than 4 years 20%
More than 4 but less than 5 years 40%
More than 5 but less than 6 years 60%
More than 6 but less than 7 years 80%
CAPITAL GAINS TAX
Normal rates
Residential property
Lower rate 10% 18%
Higher rate 20% 28%
Annual exempt amount £12,000
Entrepreneurs’ relief – Lifetime limit £10,000,000
– Rate of tax 10%
TAX RATES AND ALLOWANCES
KAPLAN PUBLISHING P.43
NATIONAL INSURANCE CONTRIBUTIONS
Class 1 Employee £1 – £8,632 per year Nil
£8,633 – £50,000 per year 12%
£50,001 and above per year 2%
Class 1 Employer £1 – £8,632 per year Nil
£8,633 and above per year 13.8%
Employment allowance £3,000
Class 1A 13.8%
Class 2 £3.00 per week
Small profits threshold £6,365
Class 4 £1 – £8,632 per year Nil
£8,633 – £50,000 per year 9%
£50,001 and above per year 2%
RATES OF INTEREST (assumed)
Official rate of interest 2.50%
Rate of interest on underpaid tax 3.25%
Rate of interest on overpaid tax 0.50%
STANDARD PENALTIES FOR ERRORS Taxpayer behaviour Maximum
penalty Minimum penalty – unprompted disclosure
Minimum penalty – prompted disclosure
Deliberate and concealed 100% 30% 50%
Deliberate but not concealed 70% 20% 35%
Careless 30% 0% 15%
KAPLAN PUBLISHING P.45
TIME LIMITS AND ELECTION DATES
Income tax
Election/claim Time limit For 2019/20
Agree the amount of trading losses to carry forward
4 years from the end of the tax year in which the loss arose
5 April 2024
Current and prior year set‐off of trading losses against total income (and chargeable gains)
12 months from 31 January following the end of the tax year in which the loss arose
31 January 2022
Three year carry back of trading losses in the opening years
12 months from 31 January following the end of the tax year in which the loss arose
31 January 2022
Three year carry back of terminal trading losses in the closing years
4 years from the end of the last tax year of trading
5 April 2024
National Insurance Contributions
Class 1 employee and employer’s – pay days
17 days after the end of each tax month under PAYE system
(14 days if not paid electronically)
22nd of each month
Class 1 A NIC – pay day 22 July following end of tax year
(19 July if not paid electronically)
22 July 2020
Class 2 NICs – pay day Paid under self‐assessment with balancing payment
31 January 2021
Class 4 NICs – pay days Paid under self‐assessment with income tax See self‐assessment
Capital gains tax
Replacement of business asset relief for individuals
(Rollover relief)
4 years from the end of the tax year:
– in which the disposal occurred or
– the replacement asset was acquired
whichever is later
5 April 2024
for 2018/19 sale and 2019/20
acquisition
Holdover relief of gain on the gift of a business asset (Gift relief)
4 years from the end of the tax year in which the disposal occurred
5 April 2024
Entrepreneurs’ relief
12 months from 31 January following the end of the tax year in which the disposal occurred
31 January 2022
Determination of principal private residence
2 years from the acquisition of the second property
TX–UK : TAXATION (FA2019)
P.46 KAPLAN PUBLISHING
Self‐assessment – individuals
Election/claim Time limit For 2019/20
Pay days for income tax and class 4 NIC
1st instalment:
31 January in the tax year
2nd instalment:
31 July following the end of tax year
Balancing payment:
31 January following the end of tax year
31 January 2020
31 July 2020
31 January 2021
Pay day for CGT and class 2 NIC 31 January following the end of tax year 31 January 2021
Filing dates
If notice to file issued by 31 October following end of tax year
If notice to file issued after 31 October following end of tax year
Paper return:
31 October following end of tax year
Electronic return:
31 January following end of tax year
3 months from the date of issue of the notice to file
31 October 2020
31 January 2021
Retention of records
Business records
Personal records
5 years from 31 January following end of the tax year
12 months from 31 January following end of the tax year
31 January 2026
31 January 2022
HMRC right of repair 9 months from date the return was filed
Taxpayer’s right to amend a return
12 months from 31 January following end of the tax year
31 January 2022
Taxpayer’s claim for overpayment relief
4 years from the end of the tax year 5 April 2024
HMRC can open an enquiry 12 months from submission of the return
HMRC can raise a discovery assessment
– No careless or deliberate behaviour
– Tax lost due to careless behaviour
– Tax lost due to deliberate behaviour
4 years from the end of the tax year
6 years from the end of the tax year
20 years from the end of the tax year
5 April 2024
5 April 2026
5 April 2040
Taxpayer’s right of appeal against an assessment
30 days from the assessment
– appeal in writing
TIME LIMITS AND ELECTIONS DATES
KAPLAN PUBLISHING P.47
Corporation tax
Election/claim Time limit
Replacement of business asset relief for companies (Rollover relief)
4 years from the end of the chargeable accounting period:
– in which the disposal occurred or
– the replacement asset was acquired
whichever is later
Offset trading losses brought forward against total profits (income and gains)
2 years from the end of the chargeable accounting period in which the loss is relieved
Current year set‐off of trading losses against total profits (income and gains), and
12 month carry back of trading losses against total profits (income and gains)
2 years from the end of the chargeable accounting period in which the loss arose
Surrender of trading losses to other group companies (Group relief)
2 years after the claimant company’s chargeable accounting period
Election for transfer of capital gain or loss to another company within the gains group
2 years from the end of the chargeable accounting period in which the disposal occurred by the company actually making the disposal
Self‐assessment – companies
Election/claim Time limit
Pay day for small and medium companies 9 months and one day after the end of the chargeable accounting period
Pay day for large companies Instalments due on 14th day of:
– Seventh, tenth, thirteenth, and sixteenth month after the start of the chargeable accounting period
Filing dates Later of:
– 12 months from the end of the chargeable accounting period
– 3 months from the issue of a notice to deliver a corporation tax return
Company’s claim for overpayment relief 4 years from the end of the chargeable 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 chargeable accounting period
TX–UK : TAXATION (FA2019)
P.48 KAPLAN PUBLISHING
Value added tax
Election/claim Time limit
Compulsory registration
Historic test:
– Notify HMRC
– Charge VAT Future test:
– Notify HMRC
– Charge VAT
30 days from end of the month in which the threshold was exceeded
First day of second month after the month when taxable supplies exceeded the threshold
30 days from the date it is anticipated that the threshold will be exceeded
The date it is anticipated that the threshold will be exceeded (i.e. the beginning of the 30 day period)
Compulsory deregistration Notify HMRC 30 days from cessation
Filing of VAT return and payment of VAT One month and seven days after the end of the return period
KAPLAN PUBLISHING 1
Section 1
PRACTICE INCOME TAX AND NATIONAL INSURANCE QUESTIONS
PRACTICE SECTION A OBJECTIVE TEST QUESTIONS
INCOME TAX BASICS AND EMPLOYMENT INCOME
1 Said has made a number of investments during the tax year.
Tick the appropriate box to show which of the following investments will generate taxable income and which will generate exempt income.
Taxable Exempt
£400 in shares in the company he works for
£1,000 in an Individual Savings Account
£800 in a NS&I investment account
£500 purchasing a NS&I certificate
2 Specimen exam June 2015 OT question
Martina is self‐employed, and for the year ended 5 April 2020 her trading profit was £111,900. During the tax year 2019/20, Martina made a gift aid donation of £800 (gross) to a national charity.
What amount of personal allowance will Martina be entitled to for the tax year 2019/20?
A £12,500
B £6,950
C £6,550
D £600
TX–UK: TAXATION (FA2019)
2 KAPLAN PUBLISHINGH
3 Fiona is a sole trader. During the tax year 2019/20 she had taxable trading income of £106,800 and received dividend income of £1,500. Fiona made a gift aid donation of £2,000 (gross) during the tax year 2019/20.
What amount of personal allowance is Fiona entitled to for the tax year 2019/20?
4 Genna and Wayne are a married couple. In the tax year 2019/20 Genna had a salary of £5,000 and Wayne had property income of £40,650. They have made an election to transfer the fixed amount of personal allowance from Genna to Wayne.
What is Wayne’s income tax liability for the tax year 2019/20?
A £4,380
B £4,130
C £5,380
D £5,880
5 Tick the appropriate box to show which of the following items of expenditure are deductible in the calculation of an individual’s taxable income.
Deductible Not deductible
A contribution into a personal pension scheme
A charitable gift aid donation
A contribution into an employer’s HM Revenue and Customs registered occupational pension scheme
A charitable donation made under the payroll deduction scheme
6 June 2015 OT question
For the tax year 2019/20, Chi has a salary of £53,000. She received child benefit of £1,789 during this tax year.
What is Chi’s child benefit income tax charge for the tax year 2019/20?
A £1,789
B £0
C £1,252
D £536
£
PRACTICE INCOME TAX AND NATIONAL INSURANCE QUESTIONS : SECTION 1
KAPLAN PUBLISHING 3
7 Ifram has been employed for many years and has also recently become a partner in a partnership. He is in the process of completing his tax return and has asked your advice regarding the interest payments he has made.
Identify, by ticking the appropriate box, whether his interest payments represent qualifying interest and are deductible from his total income or are not qualifying.
Qualifying interest Not qualifying
Interest paid on a loan he incurred to purchase a laptop for use in his employment
Interest paid on the mortgage for his principal private residence
Interest paid on an amount he borrowed to finance the acquisition of 2,000 shares in a quoted company
Interest paid on a loan he took to invest capital in a partnership in order to become a partner
8 June 2015 OT question
Samuel is planning to leave the UK to live overseas, having always previously been resident in the UK. He will not automatically be treated as either resident in the UK or not resident in the UK. Samuel has several ties with the UK and will need to visit the UK for 60 days each tax year. However, he wants to be not resident after he leaves the UK.
For the first two tax years after leaving the UK, what is the maximum number of ties which Samuel could keep with the UK without being treated as resident in the UK?
A One
B Four
C Two
D Three
9 Bao spent 37 days travelling in the UK during the tax year 2019/20. He has never been resident in the UK prior to the tax year 2019/20.
Minh arrived in the UK from Vietnam on 10 November 2019 to work full time in the UK. Minh did not work full‐time in Vietnam before arriving in the UK.
Identify, by ticking the appropriate box, who is treated as UK resident in the tax year 2019/20.
Resident Not resident
Bao
Min