Introduction to Business Taxation, Finance Act 2005 (CIMA Professional Handbook)

618 Pages·2006·4.56 MB·English

by  Christopher Jones

Introduction to Business Taxation
‘Finance Act 2005’
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Introduction to
Business Taxation
‘Finance Act 2005’
Chris Jones, BA CTA (Fellow) ATT

AMSTERDAM • BOSTON • HEIDELBERG • LONDON • NEW YORK • OXFORD
PARIS • SAN DIEGO • SAN FRANCISCO • SINGAPORE • SYDNEY • TOKYO
Elsevier Butterworth-Heinemann
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First published 2006
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ISBN 0 7506 6938 1

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CONTENTS
Preface ix
CIMA Tax Tables xi
A: Introduction to the UK Tax System 1
B: Computation of Taxable Trading Profit 9
B1: Trading Income and the Badges of Trade 9
B2: Adjustment of Profit 17
B3: Capital v Revenue 29
B4: Capital Allowances – Definition 37
B5: Capital Allowances – Computation 45
B6: Industrial Buildings Allowances 57
B7: Intangible Fixed Assets 73
B8: Research and Development Expenditure 79
B9: Tax Law and Accounting Practice 87
C: Taxation of Limited Companies 95
C1: Computation of Corporation Tax 95
C2: Associated Companies 103
C3: Short Accounting Periods 111
C4: Long Periods of Account 117
C5: Corporation Tax Self Assessment (CTSA) 127
C6: Payment of Corporation Tax 139
C7: Interest on Late Paid Tax 147
C8: CTSA Penalty Regime 153
C9: Income from Property 159
C10: Loan Relationships 163
C11: Relief for Trading Losses 171
C12: Relief for Other Losses 181
C13: Corporate Capital Gains 187
C14: Rollover Relief 197
C15: Shares and Securities: Matching Rules 205
C16: Substantial Shareholding Exemption 215
C17: The Principles of Group Relief 221
C18: Group Capital Gains 235
C19: Close Company Definition 247
C20a: Close Company Implications – Part 1 255
vi Contents
C20b: Close Company Implications – Part 2 261
C21: Investment Companies 267
C22: Corporate Venturing Scheme 273
D: Employee Tax Matters 281
D1: Employed or Self Employed? 281
D2: Introduction to Employment Income & Benefits 289
D3: Company Car & Fuel Benefits 303
D4: Living Accommodation – Taxable Benefits 315
D5: Loans to Employees & Use of Assets 323
D6: Miscellaneous Benefits 331
D7: Expenses of Employment 341
D8: Calculating the Income Tax Liability 351
D9: Introduction to PAYE 359
D10: PAYE End of Year Returns 369
D11: Class 1 National Insurance Contributions 377
D12: Class 1A and 1B National Insurance Contributions 387
D13: Termination Payments 397
D14a: Occupational Pensions & Furbs 409
D14b: The New Pension Regime 415
D14c: The Enterprise Investment Scheme 417
E: Value Added Tax 425
E1: Overview of the VAT System 425
E2: Registration 431
E3: Definition of Supplies 441
E4: Liability of the Supply 445
E5: Schedule 8 VATA 1994 – Zero Rating 449
E6: Schedule 9 VATA 1994 – Exemptions 457
E7: Value of the Supply 461
E8: Deemed Supplies and Self-Supplies 473
E9: Time of Supply 483
E10a: Input Tax: When to Recover 491
E10b: Partial Exemption 495
E11: VAT Records and Returns 513
E12: Accounting for VAT 525
E13: Bad Debt Relief 539
E14: Control Visits, Appeals and Assessments 543
Contents vii
E15a: Misdeclaration Penalty 557
E15b: Late Registration Penalty 563
E15c: Default Surcharge 569
E15d: Repeated Misdeclaration Penalty 577
E15e: Other Penalties, Interest and Mitigation 583
E16: Refunds, Repayment Supplement and Interest 595
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PREFACE
This book provides all the material you need for the CIMA Professional Development
Certificate in Business Taxation. Within each chapter you will find some examples for
you to try, to test you on the important rules covered in the chapter.
At the end of each chapter, there is a short summary which contains a “pocket digest”
of the rules covered within the chapter. These individual summaries form a
comprehensive overview of the syllabus.
As this manual has been written specifically to cover all areas of the syllabus we are
confident you will find this an invaluable tool leading to success in the examination.