C1) On 6th April 2020, Tilda sold a freehold warehouse (BUILDING 2) for £265,000 which she had purchased on 10th March 2004 for £140,000. In the tax year 2004/5, Tilda made a claim to rollover the maximum possible gain into the base cost of BUILDING 2. This was after she sold an old office freehold (BUILDING 1) for £150,000 on 15th April 2004, (Tilda had acquired this building on 20th September 2000 for £120,000). Both buildings have always been used entirely for business purposes in the wholesale business Tilda runs as a sole trader. Required: Calculate the net chargeable gain Tilda will be taxed on in 2020/21, on the disposal of BUILDING 2, assuming Tilda makes no other capital disposals in the tax year. C2) The UK tax gap in 2021 was £35billion or 5.6% of total tax liability. Required: Identify two factors that contribute to the gross UK tax gap and explain two tax policy/administrative approaches the UK government takes to mitigate the impact and to collect the tax not otherwise voluntarily paid. C3) The contamination (pollution) of land is a serious environmental concern. Required: Explain how tax policy design can be used to reduce land contamination. Your answer can make reference to UK current policy design or overseas tax policy you are familiar with, but should consider the difficulties with such policy design C4) Helta Ltd acquired 100% of the share capital of Buzz Ltd on 1 January 2021. On that date, Helta Ltd began implementing a major change in the nature of Buzz Ltd’s trade. The trading profits/(losses) of each company for the two years ended 31 March 2021 are: Buzz Ltd and Helta Ltd ££ Year ended 31 March 2020: 80,000 (Buzz) 20,000 (Helta) Year ended 31 March 2021: 100,000 (Buzz) 20,000 (Helta) The profits and losses are generated evenly throughout these periods. Neither company has any other income or gains, nor any other associated companies. Required: State, with supporting calculations, how relief is obtained for Buzz Ltd’s loss of £100,000, on the basis that the companies claim relief for losses as soon as possibl
C1) On 6th April 2020, Tilda sold a freehold warehouse (BUILDING 2) for £265,000 which
she had purchased on 10th March 2004 for £140,000.
In the tax year 2004/5, Tilda made a claim to rollover the maximum possible gain into the
base cost of BUILDING 2. This was after she sold an old office freehold (BUILDING 1) for
£150,000 on 15th April 2004, (Tilda had acquired this building on 20th September 2000 for
£120,000).
Both buildings have always been used entirely for business purposes in the wholesale
business Tilda runs as a sole trader.
- Required: Calculate the net chargeable gain Tilda will be taxed on in 2020/21, on
the disposal of BUILDING 2, assuming Tilda makes no other capital disposals in
the tax year.
C2) The UK tax gap in 2021 was £35billion or 5.6% of total tax liability.
- Required: Identify two factors that contribute to the gross UK tax gap and
explain two tax policy/administrative approaches the UK government takes to
mitigate the impact and to collect the tax not otherwise voluntarily paid.
C3) The contamination (pollution) of land is a serious environmental concern.
- Required: Explain how tax policy design can be used to reduce land
contamination. Your answer can make reference to UK current policy design
or overseas tax policy you are familiar with, but should consider the difficulties
with such policy design
C4) Helta Ltd acquired 100% of the share capital of Buzz Ltd on 1 January 2021. On that
date, Helta Ltd began implementing a major change in the nature of Buzz Ltd’s trade.
The trading
Buzz Ltd and Helta Ltd ££
Year ended 31 March 2020: 80,000 (Buzz) 20,000 (Helta)
Year ended 31 March 2021: 100,000 (Buzz) 20,000 (Helta)
The profits and losses are generated evenly throughout these periods.
Neither company has any other income or gains, nor any other associated companies.
Required: State, with supporting calculations, how relief is obtained for Buzz Ltd’s loss of
£100,000, on the basis that the companies claim relief for losses as soon as possible.
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