ACCA TX ^UK Syllabus B. Income Tax And Nic Liabilities - Income tax in the exam - Past Papers ^{1 / 1}

You should assume that today’s date is 15 March 2016.

You are a trainee chartered certified accountant dealing with the tax affairs of Gamila, who is the managing director of, and (currently) 100% shareholder in, Alimag Ltd.

For the year ended 5 April 2017, Alimag Ltd’s taxable total profits, before taking account of director’s remuneration, are forecast to be £180,000.

Original basis of profit extraction
Gamila originally intended to withdraw £125,000 of the profits as director’s remuneration, and you have calculated that this approach would result in the following tax liabilities and national insurance contributions (NICs):

Revised basis of profit extraction
After a meeting with Gamila, a more beneficial approach to withdrawing £125,000 of profits from Alimag Ltd has been agreed for the tax year 2016–17:

(1) Gamila will withdraw gross director’s remuneration of £25,000.

(2) Gamila’s husband, Magnus, will become a 25% shareholder in Alimag Ltd.

(3) Alimag Ltd will then pay dividends of £75,000 to Gamila and £25,000 to Magnus.

Neither Gamila nor Magnus will have any other income for the tax year 2016–17.

Required:
Calculate the overall saving of taxes and NICs for the tax year 2016–17 if the revised basis of profit extraction is used instead of the original basis of profit extraction.

Notes:
(1) You are expected to calculate the income tax payable by Gamila and Magnus, the class 1 NIC payable (if any) by Gamila, Magnus and Alimag Ltd, and the corporation tax liability of Alimag Ltd for the year ended 5 April 2017.

(2) Alimag Ltd is not entitled to the NIC annual employment allowance.

(3) You should assume that the rate of corporation tax remains unchanged.

Up to and including the tax year 2014–15, Dill was always resident in the United Kingdom (UK), being in the UK for more than 300 days each tax year. She was also resident in the UK for the tax year 2016–17. However, during the tax year 2015–16, Dill was overseas for 305 days, spending just 60 days in the UK. Dill has a house in the UK and stayed there on the 60 days which she spent in the UK. She also has a house overseas. For the tax year 2015–16, Dill did not have any close family in the UK, did not do any work in the UK and was not treated as working full-time overseas.

On 6 April 2016, Dill returned to the UK and commenced employment with Herb plc as the IT manager. She also set up a small technology business which she ran on a self-employed basis, but this business failed and Dill ceased self-employment on 5 April 2017. The following information is available for the tax year 2016–17:

Employment
(1) During the tax year 2016–17, Dill was paid a gross annual salary of £365,000.
(2) In addition to her salary, Dill has been paid the following bonuses by Herb plc:

(3) Throughout the tax year 2016–17, Dill had the use of Herb plc’s company gym which is only open to employees of the company. The cost to Herb plc of providing this benefit was £780.

(4) Throughout the tax year 2016–17, Herb plc provided Dill with a home entertainment system for her personal use. The home entertainment system cost Herb plc £5,900 on 6 April 2016.

(5) During the tax year 2016–17, Dill’s three-year-old son was provided with a place at Herb plc’s workplace nursery. The total cost to the company of providing this nursery place was £7,200 (240 days at £30 per day).

(6) On 1 June 2016, Herb plc provided Dill with an interest-free loan of £80,000 which she used to renovate her main residence. No loan repayments were made before 5 April 2017.

(7) On 25 January 2017, Herb plc paid a health club membership fee of £990 for the benefit of Dill.

(8) During the tax year 2016–17, Dill used her private motor car for both private and business journeys. The total mileage driven by Dill throughout the tax year was 16,000 miles, with all of this mileage reimbursed by Herb plc at the rate of 25p per mile. However, only 14,500 miles were in the performance of Dill’s duties for Herb plc.

(9) During the tax year 2016–17, Dill paid an annual professional subscription of £560 which is relevant to her employment with Herb plc. She also paid an annual membership fee of £1,620 to a golf club which she uses to entertain Herb plc’s suppliers. Herb plc did not reimburse Dill for either of these costs.

(10) During the tax year 2016–17, Dill contributed the maximum possible tax relievable amount into Herb plc’s HM Revenue and Customs’ (HMRC) registered money purchase occupational pension scheme. The company did not make any contributions on her behalf. Dill has never previously been a member of a pension scheme.

Self-employment
For the tax year 2016–17, Dill’s self-employed business made a tax adjusted trading loss of £58,000. Dill will claim relief for this loss against her total income for the tax year 2016–17.

Other income
(1) On 1 November 2016, Dill received a premium bond prize of £1,000.
(2) On 28 February 2017, Dill received interest of £1,840 on the maturity of savings certificates from NS&I (National Savings and Investments).

Required:
(b) Calculate Dill’s taxable income for the tax year 2016–17.

Note: You should indicate by the use of zero (0) any items which are not taxable or deductible. (12 marks)

Patience was born on 31 December 1954. She retired on 31 December 2014, and on that date ceased employment and self-employment. The following information is available in respect of the tax year 2014–15:

Employment
(1) Patience was employed by a private school as a teacher. From 6 April to 31 December 2014, she was paid a salary of £3,750 per month.

(2) During the period 6 April to 31 December 2014, Patience contributed 6% of her monthly gross salary of £3,750 into her employer’s HM Revenue and Customs’ (HMRC’s) registered occupational pension scheme. Patience’s employer contributed a further 10% on her behalf.

(3) During the period 6 April to 30 June 2014, Patience’s granddaughter was provided with a free place at the private school run by Patience’s employer. The normal fee payable would have been £4,600. The additional marginal expense of providing the place for the grandchild was £540.

(4) On 25 June 2014, Patience was given a clock valued at £600 as an award for her 25 years of teaching at her employer’s school. She has not previously received any similar awards.

(5) Patience’s employer provided her with an interest-free loan so that she could purchase a season ticket for the train to work. The balance of the loan outstanding at 6 April 2014 was £8,000, and Patience repaid the loan in full on 31 December 2014.

Self-employment
(1) Patience was self-employed as a private tutor. Her trading profit for the year ended 31 July 2014 was £14,800. This figure is after taking account of capital allowances.

(2) Patience’s trading profit for the final five-month period of trading from 1 August to 31 December 2014 was £6,900. This figure is before taking account of capital allowances.

(3) The tax written down value of the capital allowances main pool at 1 August 2014 was £2,200. On 10 August 2014, Patience purchased a laptop computer for £1,700.

On the cessation of trading, Patience personally retained the laptop computer. Its value on 31 December 2014 was £1,200. The remainder of the items included in the main pool were sold for £800 on 31 December 2014.

(4) Patience has unused overlap profits brought forward of £3,700.

Personal pension contributions
During the period 6 April to 31 December 2014, Patience contributed a total of £3,600 (net) into a personal pension scheme.

Pension income
During the period 1 January to 5 April 2015, Patience received the state pension of £1,450, a pension of £6,000 from her employer’s occupational pension scheme, and a private pension of £3,300. These were the total gross amounts received.

Property
Patience owned two properties which were let out unfurnished until both properties were sold on 31 December 2014.

The following information is available in respect of the two properties:

Patience has never occupied either of the two properties as her main residence.

Required:
Calculate Patience’s income tax and capital gains tax liabilities for the tax year 2014–15.

Notes:
1. You should indicate by the use of zero (0) any items which are not taxable or deductible.
2. The following mark allocation is provided as guidance for this question:

Income tax   13 marks 
Capital gains tax   2 marks

Samson and Delilah are a married couple. Samson was born on 24 June 1964 and Delilah was born on 6 May 1962.

They are both employed by Rope plc, and Delilah is also a partner in a partnership. The following information is vailable in respect of the tax year 2014–15:

Samson
During the tax year 2014–15, Samson was paid a gross annual salary of £112,000 in respect of his employment with Rope plc.

Delilah
(1) During the tax year 2014–15, Delilah was paid a gross annual salary of £184,000 in respect of her employment with Rope plc.

(2) Throughout the tax year 2014–15, Rope plc provided Delilah with a petrol powered motor car which has a list price of £67,200, and an official CO2 emission rate of 207 grams per kilometre. Rope plc does not provide Delilah with any fuel for private journeys. Delilah was unable to drive her motor car for a period during the tax year 2014–15 because of a skiing accident, and during this period Rope plc provided her with a chauffeur at a total cost of £9,400.

(3) Delilah pays an annual professional subscription of £450 which is relevant to her employment with Rope plc.

Delilah also pays an annual membership fee of £1,420 to a golf club which she uses to entertain Rope plc’s clients. Rope plc does not reimburse Delilah for either of these costs.

(4) During the tax year 2014–15, Delilah donated £250 (gross) per month to charity under the payroll deduction scheme operated by Rope plc.

(5) Delilah has been in partnership with Esther and Felix for a number of years. The partnership’s tax adjusted trading profit for the year ended 31 December 2014 was £93,600. Esther is paid an annual salary of £8,000, with the balance of profits being shared 40% to Delilah, 30% to Esther and 30% to Felix.

(6) During the tax year 2014–15, Delilah paid interest of £6,200 (gross) on a personal loan taken out to purchase her share in the partnership.

(7) During the tax year 2014–15, Delilah made charitable gift aid donations totalling £6,000 (gross).

Joint income – Building society deposit account
Samson and Delilah have savings in a building society deposit account which is in their joint names. During the tax year 2014–15, they received building society interest totalling £9,600 (gross) from this joint account.

Required:
(a) Calculate Samson and Delilah’s respective income tax liabilities for the tax year 2014–15.

Note: 
The following mark allocation is provided as guidance for this requirement:
Samson (3.5 marks)
Delilah (9.5 marks)

Wai was born on 14 June 1960. She is employed as a sales manager by Qaz plc, and the following information is available in respect of the tax year 2014–15:

(1) During the tax year 2014–15, Wai was paid a gross monthly salary of £10,200.
(2) In addition to her salary, Wai has been paid the following bonuses:

(4) During the period 1 September 2014 to 5 April 2015, Qaz plc provided Wai with a petrol powered motor car which has a list price of £15,800, and an official CO2 emission rate of 86 grams per kilometre. Qaz plc does not provide Wai with any fuel for private journeys.

(5) During January 2015, Wai spent ten nights overseas on company business. Qaz plc paid Wai a daily allowance of £10 to cover the cost of personal incidental expenses, such as telephone calls to her family.

(6) Throughout the tax year 2014–15, Qaz plc allowed Wai the use of two mobile telephones. The telephones had each cost £400 when purchased by the company in March 2014.

(7) Throughout the tax year 2014–15, Qaz plc provided Wai with living accommodation. The company had purchased the property on 1 June 2011 for £142,000, and it has been provided to Wai since 1 February 2013.

Improvements costing £14,400 were made to the property during October 2011, and further improvements costing £9,800 were made during August 2013. The annual value of the property is £4,600.

Required:
(a) Calculate Wai’s taxable income for the tax year 2014–15. (12 marks)

Alfred and Edward King are brothers. They are trying to calculate their balancing payments for the tax year 2013–14, and the following information is available:

Alfred King
(1) Alfred was born on 14 June 1953.

(2) He has been in partnership with Anne Royal and Mary Regal running a retail shop since 6 April 2004, but Mary resigned as a partner on 1 January 2014.

(3) The partnership’s tax adjusted trading profit for the year ended 5 April 2014 is £228,000. This figure is before taking account of capital allowances.

(4) The tax written down value of the partnership’s capital allowances main pool at 6 April 2013 was £10,000.

The only capital expenditure during the year ended 5 April 2014 was the cost of £82,000 for refurbishing the second floor of the partnership’s shop during January 2014. The cost was made up as follows:

(5) The partners have always shared profits equally, and continued to do so after Mary resigned.

(6) During the tax year 2013–14, Alfred received dividends totalling £3,060, of which £720 were from a stocks and shares individual savings account (ISA). These were the actual cash amounts received.

(7) During the tax year 2013–14, Alfred made gift aid donations totalling £1,920 (net) to national charities.

(8) Alfred’s payments on account of income tax and class 4 national insurance contributions in respect of the tax year 2013–14 totalled £20,200.

Edward King
(1) Edward was born on 29 October 1951.

(2) Edward is employed by Stately Ltd as a marketing director. During the tax year 2013–14, he was paid gross director’s remuneration of £179,000.

(3) On 1 December 2013, Stately Ltd provided Edward with an interest-free loan of £87,000, which he used to purchase a holiday cottage.

(4) Stately Ltd has provided Edward with a home entertainment system for his personal use since 6 April 2010.

The home entertainment system had been purchased by Stately Ltd on 6 April 2010 for £5,200. The company gave the home entertainment system to Edward on 6 April 2013 for no charge, although its market value at that time was £2,200.

(5) During the tax year 2013–14, Edward contributed 4% of his gross director’s remuneration of £179,000 into Stately Ltd’s HM Revenue and Customs’ registered occupational pension scheme. The company contributed a further 6% on his behalf.

(6) During the tax year 2013–14, Edward donated £200 (gross) per month to charity under the payroll deduction scheme.

(7) During the tax year 2013–14, Edward used his private motor car for business purposes. He drove 12,000 miles in the performance of his duties for Stately Ltd, for which the company paid an allowance of 35 pence per mile.

(8) On 1 January 2014, Edward paid a professional subscription of £240 to the Guild of Marketing, an HM Revenue and Customs’ approved professional body.

(9) For the tax year 2013–14, Stately Ltd deducted a total of £62,600 in PAYE from Edward’s earnings.

Required:
Calculate Alfred and Edward King’s respective balancing payments for the tax year 2013–14.

Notes:
1. You should take account of class 4 national insurance contributions when calculating the balancing payment for Alfred King.

2. The following mark allocation is provided as guidance for this requirement:

Alfred      (12·5 marks)
Edward   (10·5 marks)

Richard Tryer was born on 22 June 1971. He is employed by Prog plc as a computer programmer, and is also self-employed as a website designer. Richard has tried to prepare his own income tax computation for the tax year 2013–14, but he has found it more difficult than expected. Although the sections which Richard has completed are correct, there are a significant number of omissions. The omissions are marked as outstanding (O/S). The partly completed income tax computation is as follows:

Richard Tryer – Income tax computation 2013–14

Note 1 – Trading profit
Richard commenced self-employment on 1 January 2013. He had a tax adjusted trading profit of £3,840 for the four-month period ended 30 April 2013, and £12,060 for the year ended 30 April 2014. These figures are before taking account of capital allowances.

The only item of plant and machinery owned by Richard is his motor car, which cost £18,000 on 1 September 2013.

The motor car has a CO2 emission rate of 142 grams per kilometre, and 70% of the mileage driven by Richard is for private journeys.

Note 2 – Car and fuel benefits
Throughout the tax year 2013–14, Prog plc provided Richard with a petrol-powered motor car which has a list price of £17,900. The motor car cost Prog plc £17,200, and it has a CO2 emission rate of 144 grams per kilometre. During the tax year 2013–14, Richard made contributions of £1,200 to Prog plc for the use of the motor car.

During the period 1 July 2013 to 5 April 2014, Prog plc also provided Richard with fuel for private journeys. The total cost of fuel during the period 1 July 2013 to 5 April 2014 was £4,200, of which 45% was for private journeys.

Richard did not make any contributions towards the cost of the fuel.

Note 3 – Living accommodation
Throughout the tax year 2013–14, Prog plc provided Richard with living accommodation. The property has been rented by Prog plc since 6 April 2013 at a cost of £1,100 per month. On 6 April 2013, the market value of the property was £122,000, and it has an annual value of £8,600.

On 6 April 2013, Prog plc purchased furniture for the property at a cost of £12,100. The company pays for the running costs relating to the property, and for the tax year 2013–14 these amounted to £3,700.

Note 4 – Property business profit
Richard owns a freehold shop which is let out unfurnished. The shop was purchased on 1 October 2013, and during October 2013 Richard spent £8,400 replacing the building’s roof. The shop was not usable until this work was carried out, and this fact was represented by a reduced purchase price. During November 2013, Richard spent £800 on advertising the property for rent.

On 1 December 2013, the property was let to a tenant, with Richard receiving a premium of £12,000 for the grant of a 30-year lease. The monthly rent is £830 payable in advance, and during the period 1 December 2013 to 5 April 2014 Richard received five rental payments.

Due to a fire, £8,600 was spent on replacing the roof of the shop during February 2014. Only £8,200 of this was paid for by Richard’s property insurance.

Richard paid insurance of £480 in respect of the property. This was paid on 1 October 2013 and is for the year ended 30 September 2014.

Other information
Richard did not make any personal pension contributions during the tax year 2013–14. He has never been a member of a pension scheme.

Required:
(a) Calculate the income tax payable by Richard Tryer for the tax year 2013–14. (19 marks)

Note 1 – Revenue
The revenue figure of £71,900 includes receivables of £1,600 which were owed as at 5 April 2014.

Note 2 – Motor expenses
The total motor expenses for the year ended 5 April 2014 were £5,500, of which 20% was for private journeys. This proportion has been disallowed in calculating the trading profit. During the year ended 5 April 2014, Chi drove 13,200 business miles.

Note 3 – Other expenses
The other expenses figure of £8,200 includes payables of £900 which were owed as at 5 April 2014.

Note 4 – Capital allowances
Capital allowances consist of an annual investment allowance claim of £4,020 in respect of office equipment purchased on 6 April 2013, and a writing down allowance of £2,880 claimed in respect of Chi’s motor car. The motor car had cost £20,000 on 6 April 2013.

Additional information
Chi has no other income for the tax year 2013–14.
She did not make any payments on account in respect of the tax year 2013–14.

Required:
(a) Based on the trading profit of £52,400 for the year ended 5 April 2014:

(iii) Determine the amount of income tax and national insurance contributions which will be due for payment under self-assessment by Chi Needle on 31 January 2015. (3 marks)

John and Rhonda Beach are a married couple. The following information is available for the tax year 2012–13:

John Beach
(1) John is aged 59 and is employed by Surf plc as a sales director. During the tax year 2012–13, he was paid gross director’s remuneration of £184,000.

(2) During the tax year 2012–13, John contributed £28,000 into Surf plc’s HM Revenue and Customs’ registered occupational pension scheme. The company contributed a further £12,000 on his behalf. Both John and Surf plc have made exactly the same contributions for the previous five tax years.

(3) During the period 6 April to 31 October 2012, John used his private motor car for both private and business journeys. He was reimbursed by Surf plc at the rate of 60p per mile for the following mileage:

(4) During the period from 1 November 2012 to 5 April 2013, Surf plc provided John with a petrol powered motor car which has a list price of £28,200 and an official CO2 emission rate of 206 grams per kilometre. Surf plc also provided John with fuel for both his business and private journeys.

(5) During 2009 Surf plc provided John with a loan which was used to purchase a yacht. The amount of loan outstanding at 6 April 2012 was £84,000. John repaid £12,000 of the loan on 31 July 2012, and then repaid a further £12,000 on 31 December 2012. He paid loan interest of £1,270 to Surf plc during the tax year 2012–13. The taxable benefit in respect of this loan is calculated using the average method.

(6) During the tax year 2012–13, John made personal pension contributions up to the maximum amount of available annual allowances, including any unused amounts brought forward from previous years. These contributions were in addition to the contributions he made to Surf plc’s occupational pension scheme (see note (2)). John has not made any personal pension contributions in previous tax years.

(7) John owns a holiday cottage which is let out as a furnished holiday letting, although the letting does not qualify as a trade under the furnished holiday letting rules. The property business profit for the year ended 5 April 2013 was £6,730.

Rhonda Beach
(1) Rhonda is aged 66 and during the tax year 2012–13 she received pensions of £8,040.

(2) In addition to her pension income, Rhonda received gross building society interest of £21,400 during the tax year 2012–13.

Required:
(a) Calculate John Beach’s income tax liability for the tax year 2012–13. (14 marks)

John and Rhonda Beach are a married couple. The following information is available for the tax year 2012–13:

John Beach
(1) John is aged 59 and is employed by Surf plc as a sales director. During the tax year 2012–13, he was paid gross director’s remuneration of £184,000.

(2) During the tax year 2012–13, John contributed £28,000 into Surf plc’s HM Revenue and Customs’ registered occupational pension scheme. The company contributed a further £12,000 on his behalf. Both John and Surf plc have made exactly the same contributions for the previous five tax years.

(3) During the period 6 April to 31 October 2012, John used his private motor car for both private and business journeys. He was reimbursed by Surf plc at the rate of 60p per mile for the following mileage:

(4) During the period from 1 November 2012 to 5 April 2013, Surf plc provided John with a petrol powered motor car which has a list price of £28,200 and an official CO2 emission rate of 206 grams per kilometre. Surf plc also provided John with fuel for both his business and private journeys.

(5) During 2009 Surf plc provided John with a loan which was used to purchase a yacht. The amount of loan outstanding at 6 April 2012 was £84,000. John repaid £12,000 of the loan on 31 July 2012, and then repaid a further £12,000 on 31 December 2012. He paid loan interest of £1,270 to Surf plc during the tax year 2012–13. The taxable benefit in respect of this loan is calculated using the average method.

(6) During the tax year 2012–13, John made personal pension contributions up to the maximum amount of available annual allowances, including any unused amounts brought forward from previous years. These contributions were in addition to the contributions he made to Surf plc’s occupational pension scheme (see note (2)). John has not made any personal pension contributions in previous tax years.

(7) John owns a holiday cottage which is let out as a furnished holiday letting, although the letting does not qualify as a trade under the furnished holiday letting rules. The property business profit for the year ended 5 April 2013 was £6,730.

Rhonda Beach
(1) Rhonda is aged 66 and during the tax year 2012–13 she received pensions of £8,040.

(2) In addition to her pension income, Rhonda received gross building society interest of £21,400 during the tax year 2012–13.

Required:
(c) Calculate Rhonda Beach’s income tax liability for the tax year 2012–13. (4 marks)

On 30 June 2011 Josie Jones, aged 42, ceased self-employment as a graphic designer. On 1 August 2011 she commenced employment with Typo plc as a creative director. The following information is available for the tax year 2011–12:

Self-employment
(1) Josie’s trading profits for the final two periods of trading were as follows:

Both these figures are before taking account of capital allowances.

(2) The tax written down value of the capital allowances main pool at 1 May 2010 was £13,200. On 21 May 2011 Josie purchased computer equipment for £3,600. All of the items included in the main pool were sold for £7,700 on 30 June 2011, with no item being sold for more than its original cost.

(3) Josie has unused overlap profits brought forward of £41,700.

Employment
(1) Josie is paid a salary of £15,100 per month by Typo plc. The salary is paid on the last day of each calendar month.

(2) During August 2011 Typo plc paid £11,600 towards Josie’s removal expenses when she permanently moved to take up her new employment with the company as she did not live within a reasonable commuting distance. The £11,600 covered both her removal expenses and the legal costs of acquiring a new main residence.

(3) On 1 September 2011 Typo plc provided Josie with an interest free loan of £33,000 that she used to renovate her new main residence. This loan was still outstanding at 5 April 2012.

(4) During the period from 1 August 2011 to 5 April 2012, Josie was provided with free meals in Typo plc’s staff canteen. The total cost of these meals to the company was £1,340. The canteen is available to all of the company’s employees.

(5) During the period from 1 October 2011 to 5 April 2012, Typo plc provided Josie with a diesel powered motor car with an official CO2 emission rate of 149 grams per kilometre. The motor car, which has a list price of £14,400, cost Typo plc £13,900. Typo plc does not provide Josie with any fuel for private journeys.

(6) For the tax year 2011–12 Typo plc deducted a total of £43,777 in PAYE from Josie’s earnings.

Other information
(1) Josie owns two properties, which are let out. Property one qualifies as a trade under the furnished holiday letting rules, whilst property two is let out unfurnished. The income and allowable expenditure for the two properties for the tax year 2011–12 are as follows:

(2) During the tax year 2011–12 Josie received building society interest of £8,960 and dividends of £6,480. These were the actual cash amounts received.

(3) On 2 October 2011 Josie received a premium bond prize of £100.

(4) During the tax year 2011–12 Josie made gift aid donations totalling £4,400 (net) to national charities.

(5) Josie’s payments on account of income tax in respect of the tax year 2011–12 totalled £34,400.

Required:
(a) Calculate the income tax payable by Josie Jones for the tax year 2011–12.

Note: You should indicate by the use of zero any items that are non-taxable/exempt from tax. (20 marks)

On 6 April 2011 Flick Pick, aged 23, commenced employment with 3D Ltd as a film critic. On 1 January 2012 she commenced in partnership with Art Reel running a small cinema, preparing accounts to 30 April. The following information is available for the tax year 2011–12:

Employment
(1) During the tax year 2011–12 Flick was paid a gross annual salary of £23,700.

(2) Throughout the tax year 2011–12 3D Ltd provided Flick with living accommodation. The company had purchased the property in 2002 for £89,000, and it was valued at £144,000 on 6 April 2011. The annual value of the property is £4,600. The property was furnished by 3D Ltd during March 2011 at a cost of £9,400.

Partnership
(1) The partnership’s tax adjusted trading profit for the four-month period ended 30 April 2012 is £29,700. This figure is before taking account of capital allowances.

(2) The only item of plant and machinery owned by the partnership is a motor car that cost £15,000 on 1 February 2012. The motor car has a CO2 emission rate of 190 grams per kilometre. It is used by Art, and 40% of the mileage is for private journeys.

(3) Profits are shared 40% to Flick and 60% to Art. This is after paying an annual salary of £6,000 to Art.

Property income
(1) Flick owns a freehold house which is let out furnished. The property was let throughout the tax year 2011–12 at a monthly rent of £660.

(2) During the tax year 2011–12 Flick paid council tax of £1,320 in respect of the property, and also spent £2,560 on replacing damaged furniture.

(3) Flick claims the wear and tear allowance.

Value added tax (VAT)
(1) The partnership voluntarily registered for VAT on 1 January 2012, and immediately began using the flat rate scheme to calculate the amount of VAT payable. The relevant flat rate scheme percentage for the partnership’s trade is 12%.

(2) For the quarter ended 31 March 2012 the partnership had standard rated sales of £59,700, and these were all made to members of the general public. For the same period standard rated expenses amounted to £27,300. Both figures are stated inclusive of VAT.

(3) The partnership has two private boxes in its cinema that can be booked on a special basis by privileged customers. Such customers can book the boxes up to two months in advance, at which time they have to pay a 25% deposit. An invoice is then given to the customer on the day of the screening of the film, with payment of the balance of 75% required within seven days. For VAT purposes, the renting out of the cinema boxes is a supply of services.

Required:
(a) Calculate Flick Pick’s taxable income for the tax year 2011–12. (12 marks)