ADVANCED PERSONAL TAXATION

COURSEWORK 2020 / 2021

Advanced Personal Taxation

(Semester 2: Full-time)

MODULE LEADER: Shahrukh Irfan

BAAF 3rd Year

The coursework must be submitted online via Moodle Submission

Inbox

by 19 April 2021
(The hand-in date incorporates time allowed for submission of the coursework to
Turnitin and the receipt of the matching report. You should aim to upload your final
coursework at least one week prior to this hand-in date.)
Advanced Personal Taxation Coursework
1. SUBMISSION
This report has a 60% weighting in calculating your overall module mark.

It must be produced in a single Microsoft Word document and uploaded to

Moodle Submission Inbox by 19 April 2021. You must keep a duplicate copy of all
work submitted for assessment.

2. Specific instruction relating to the coursework

(a) For your guidance - the report should include the following:

- Title/cover (including the name/number of the course, the name of the module
and coursework, your name and student number, the date and the word-count)
- Page of contents
- Main body of report (Parts one, two, three and four)
- Bibliography (using Harvard style of referencing)
- Appendices.

(b) The attention of every student is drawn to the warning in the course guide on
late submission of coursework, mitigating circumstances and plagiarism. For
guidance on copyright and referencing see the following section ‘Guidance on
referencing’.

(c) It should be noted that 10% of the marks is reserved for the quality of
presentation as reflected by the bibliography, reference citations in text and
cross referencing

(d) Ensure your entire answer is contained in one file only – upload that file to the
Submission Inbox.

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 Guidance on referencing
(Supplied by Academic Misconduct Officer)

Correct referencing is an academic skill that you will be assessed on.

Correct referencing demonstrates that you have read appropriately on the subject, shows
that you are acknowledging the sources you have used (that you are not trying to cheat) and
provide information on useful sources of information to your reader.

Doing it correctly demonstrates professionalism. Doing it incorrectly will lead to reduced

marks and possibly to disciplinary action, which includes the possibility of having your
studies terminated.

I do see cases where the student has clearly deliberately attempted to cheat. These are
dealt with very firmly. However, most cases I see are where students have either referenced
poorly or not bothered with referencing at all. Otherwise good work often fails in these
circumstances.

Guidance on referencing itself is available from the resources listed at the end of this sheet.
If you have any concerns about your referencing ask for help before submitting.

Checking your referencing

You are required to upload your coursework to the Advanced Personal Taxation Moodle site
BAF_6_APT_2021. Use this site for checking your work for matching text. This will reveal
where you have not fully referenced. You will need to reference correctly or remove the
matching text from your final submission. The matching source given by the check may not
be the one that you used. Make sure you use the Library Help sheets to guide you on correct
referencing (style: Harvard).

When you submit your coursework you must submit a copy of the latest matching Turnitin
report.

The version to submit is the ‘Show highest matches first’ version (the one with numbers
in the boxes) as this is the easiest for you to check your work. When you look at your report
(use the ‘Show highest matches first’ version) you will see that there is a list of sources on
the right that match (numbers in boxes) to the highlighted text on the left.

Remember, the point of this exercise is not to remove all matching text, but to make
sure that it is properly referenced.

If you have a match of 1% or less, this will almost certainly be because of coincidence. We
are not concerned about matches of 1% or less. You do not have to do anything about these.

You need to look at all matches of 2% and above. Where there is such material that
is matching you must ensure it is referenced or remove it from your work.

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Points to note:

1. The source given in Turnitin may not be the source you used. Reference where you got
the material.

2. If it is a quote make sure you have used quotation marks and give the page number from
the source in your reference too.

3. If you have rewritten somebody’s words (this is called paraphrasing) you must reference
the source. You may see this in your report as bits of matching text in a paragraph.

4. If the match given is to another student (either at LSBU or another University), you have
probably both used material from a textbook. Make sure you have referenced the
material correctly to the textbook you have used.

5. If it matches to another student because you have worked together you are almost
certainly going to have to remove it. In an individual coursework this would be seen as
academic misconduct, in a group coursework it may be appropriate, but check your
submission requirements.

6. If you have used material from a source and the Turnitin check does not show it you still
must reference it. Thousands of new sources are added to Turnitin every day.

Further help is available on all academic matters from the ‘Academic Assistant’ at
http://www.blc.lsbu.ac.uk/aa/aa/

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 Advanced Personal Taxation Coursework

WORK TO THE NEAREST £.

IGNORE VALUE ADDED TAX.

YOU MUST ANSWER ALL PARTS OF THIS ASSIGNMENT

SECTION A
Income Tax Calculation – This question carries 50 marks.

It is early January 2020. Billy Bunter is a new client of yours. He set up a sole trade bakery
business in Cardiff, Wales on 1 June 2018 drawing up his first set of accounts for the seven
months to 31 December 2018 and using a 31 December accounting date from that point.

Billy is trying to complete his 2018/19 tax return (as it is due to be submitted online
to HMRC by 31 January 2020). He has brought you a box full of relevant information to
allow you to calculate his income tax liability and to tell him how much tax remains due.

You sift through the box and find the following information:

• Information on the bakery;

• Profit and loss accounts for the first two trading periods;
• A list of acquisitions and disposals of assets; and
• Details on other income

Each of these is reproduced below.

Information on the bakery

• Sells to local shops;
• Sole trade business established on 1 June 2018;
• Billy has six employees, including his wife Bessie; and
• The business begins trading from rented premises.

Profit and loss accounts for the first two trading periods

Seven-month period Year to

to
Notes 31 Dec 2018 31 Dec 2019
£ £
Sales 299,935 337,669
Cost of sales 1, 2 (138,321) (119,978)
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 Gross profit 161,614 217,691
Wages 3 (61,500) (92,400)
Depreciation (16,340) (31,890)
Light and heat (4,163) (7,216)
Bad debts 4 (1,960) (30)
Motor costs 5 (4,320) (5,462)
Entertaining 6 (2,640) (2,770)
Repairs 7 (962) (1,385)
Bank overdraft interest (2,750) (2,015)
Sundry expenses (2,160) (2,845)
Net profit 64,819 71,678

Notes:
1. Included within cost of sales for the first period is £800 for a new
dough mixer that Billy bought in August 2018. Given the relatively
small cost, Billy decided just to expense this.

2. Cost of sales in the second period also includes £450 costs that relate
to bakery products taken home by Billy to cater for a family Christmas
party. You establish that Billy normally manages to mark up costs by
20% when selling to customers.

3. Included within wages are amounts of £200 per month which Billy
takes as a salary and £100 per month paid to Billy’s wife Bessie who
tries to keep clerical records of the bakery’s business.

4. Bad debts in the two periods are made up as follows:

Period to Year to
31 Dec 31 Dec
2018 2019
£ £
Set up of specific provision 750
Set up of general provision 1,000
Movement in specific provision 180
Movement in general provision (220)
Write off of bad debts 210 95
Recovery of bad debts previously written (25)
off
1,960 30
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 5 Within motor costs Billy has included the running costs of the Ford
Focus used in the business. You find mileage records for the vehicle
which show that in the first period it was used 20% privately and in the
second period it was used 40% privately. The running costs amounted
to £2,600 and £4,000 for the two periods. The car has CO2 emissions
of 103g/km.

In addition, Billy leased an estate car (list price £20,000) to deliver

products to customers. The lease commenced on 1 October 2019 and
cost £370 per calendar month. There was 100% business use of the
vehicle. The estate car has CO2 emissions of 174g/km.

6 Entertaining costs are made up as follows:

Period to Year to
31 Dec 2018 31 Dec
2019
£ £
Client entertaining 1,800 2,100
Staff parties 360 420
Gifts to clients 480 250
2,640 2,770

The gifts to clients were made up as follows:

• In the first period, Billy gave his 20 best clients gifts of silver
ornaments shaped like loaves, with the bakery name engraved on
them; and
• In the second period, the gifts were for his ten best clients. Each one received
a plain crystal vase.

7 Included in repairs you find the following items:

Period to Year to
31.12.2018 31.12.2019
£ £
Repair oven (purchased in first period and not in working order) 50
Replace broken bakery shutters with more secure electric ones 320

Acquisitions and disposals of assets

Purchases £
10.5.18 Kitchen equipment 8,000
15.5.18 Billy’s Ford Focus (see note 5 above) 15,500
16.7.18 Purchase of oven (see note 7 above) 18,000

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 20.7.18 Energy-saving equipment 3,000
21.4.19 Boiler * 12,000
30.6.19 Employee Prius (CO2 = 105g/km) 25,000
11.11.19 Replacement oven 19,680

* The boiler is designated as energy-saving equipment.

Disposals
18.11.19 Sale of original oven 15,000
1.12.19 Disposal of kitchen equipment (original cost £3,500) 1,200

Details of other income

From the information Billy provides, you establish that he had the following other income
for 2018/19:
• Bank interest received of £75 from Halifax savings account;
• NS&I bank interest received of £27;
• Employment income (Billy is an occasional employee of an outdoor
catering company) of £11,690. From this, PAYE of £38 has been
deducted; and
• Dividend receipts of £6,200.

Required:
Calculate Billy’s income tax liability for 2018/19 and state what amount remains
due/will be repaid.

Instructions:
1. Remember this question relates to previous tax years so you will need to research
the relevant tax and other rates in those tax years.
2. To solve this question, you will need to calculate the following;
a. Trading income for period to 31 December 2018 and year to 31 December
2019
b. Capital allowances for year to 31 December 2018 and year to 31 December
2019 using relevant rates
c. Income tax including business income, employment income and income from
other sources.
d. You will also need to provide explanatory notes to explain your adjustments to
trading profits.

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 SECTION B
PART 1 – Impact of taxes and tax planning - Finance Act 2020

A partner of your accountancy firm has requested you to prepare detailed notes on the
impact of redundancy pay. During this brief meeting with you, the partner said the following,
“When the employment of an employee ends prematurely (i.e. before reaching the
retirement age or by resignation of the employee), it is called termination of the
employment. Ordinarily this type of termination is initiated by the employer, therefore,
breaching the employment contract between themselves and the employee. As a
result, employers usually offer the employee some benefits at the time of termination
to settle the breach of employment contract.”

The partner required you prepare a note that discusses the taxation of various benefits
provided to the employees when their employment contract is terminated. Specifically, the
following benefits must be separately discussed among any other benefits that you may
come across in your research.

• Gardening leave
• Payment in lieu of notice (PILON)
• Redundancy pay

The discussion should also include how to determine whether benefits are being paid as
‘services rendered under employment’ or ‘as compensation for breach of the employment
contract’.

References to the relevant sections of the legislation (section 62 & sections 401- 416 ITEPA
2003) will enable you to secure higher marks.

REQUIRED:
Present your detailed notes in a report format. (Calculations are not required for this
question)

Your summary should be detailed enough to be a basis for the partner to explain the matter
to his clients. It may contain examples if that will improve the clarity of your report.

(20 marks – maximum 1,000 words)

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PART 2 – The importance of overseas workday relief – Finance Act 2020

Overseas workday relief is a special relief provided to individuals working in the UK with
some days working overseas.

The manager of your accounting firm has asked you to prepare a detailed report on the
conditions required to be met in order to qualify for overseas workday relief.

REQUIRED:

Write a report as requested by the Manager. (Calculations are not required for this part of
the question).

Your report should address the following issues:

• What is overseas workday relief?

• What conditions need to be met to claim overseas workday relief?
• What planning an employee who wishes to claim overseas workday relief in the future
should do when starting a work assignment, which allows him to claim overseas
workday relief?

(20 marks – 1,000 words)

Presentation (10 marks)

Bibliography and referenced citations in text and cross referencing 5 marks.

General presentation and English 5 marks.

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