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Question 1a i

Your manager has received schedules of information from Ray and Shanira in connection with their personal tax affairs. These schedules and an extract from an email from your manager are set out below.

Schedule of information from Ray — dated 8 June 2016
I was born in 1958. I am resident and domiciled in the UK. Shanira and I are getting married on 17 September 2016.

Ray — unincorporated business
I was employed part-time until 31 March 2016. The annual salary in respect of my part-time job was £15,000. I receive bank interest (net) of £3,000 and cash dividends of £3,420 each year. The whole of my income tax liability has always been settled via tax deducted at source. I began trading on 1 June 2016. I purchased a computer on 3 June 2016, 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 have been calculated using the accruals basis, rather than the cash basis, and the budgeted taxable trading profits of the business are:

Eight months ending 31 January 2017 £35,000
Year ending 31 January 2018 £66,000

You have already informed me that my taxable trading profit based on these budgeted profits, and my income tax liability in respect of all of my income will be:

Tax year Taxable trading profit Income tax liability
2016/17 £46,000 £10,762
2017/18 £66,000 £18,762

What tax payments will I be required to make between 1 July 2016 and 30 September 2018?

Extract from an email from your manager — dated 9 June 2016 
Please prepare a memorandum for the client files which addresses the following issues:

(a) Ray — unincorporated business
(i)
Calculations of the income tax and national insurance contribution payments to be made between 1 July 2016 and 30 September 2018 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.

Tax manager

Required: Prepare the memorandum as requested in the email from your manager. The following marks are available: 
(a) Ray — unincorporated business. (i) Income tax and national insurance contribution payments, and the level of his taxable income.
(11 marks)