ti taxation study guide 2013
DESCRIPTION
Technical Integration - Business Reporting study resourcesTRANSCRIPT
The Institute of Chartered Accountants in England and Wales
TAXATION Advanced Stage
www.icaew.com
Study Guide
For exams in 2013
Contents
1 Introduction 1
2 Aim of the papers and specification grid 3
3 Study guide 4
4 Skills assessment guide 25
5 Technical knowledge 28
6 Key resources 36
Study guide 1
1 Introduction
1.1 What is the Advanced Stage? Structure and progression
The Advanced Stage of the ACA qualification is designed to ensure that candidates are able to integrate and apply their technical, professional and ethical skills in a variety of business environments.
The diagram below shows the five modules which form the basis of the Advanced Stage. The Advanced Stage is comprised of two technical integration modules and the Case Study. The two technical integration modules will be examined in a business scenario context which draws together a number of different areas of technical knowledge.
The Professional Stage consists of knowledge modules and application modules. The knowledge modules introduce the core technical knowledge and skills required by a chartered accountant. The application modules further develop and assess practical application of technical knowledge and skills.
The technical knowledge acquired at the Professional Stage is developed to an advanced level and integrated in a broader range of business scenarios in the Advanced Stage technical integration modules. The application of technical knowledge in these modules requires an appreciation of the typical issues and problems facing businesses and their relationship to corporate reporting, assurance and taxation. A greater depth of business and financial analysis will be required to understand the implications and risks arising from the business issues.
New technical topics are introduced in the technical integration modules, that are not dealt with elsewhere in the syllabus. A deeper level of technical ability is expected of candidates across the entire ACA syllabus to reflect the greater financial and business awareness needs of trainee chartered accountants approaching qualification. This is reflected particularly in assessing candidates’ proficiency and ability to integrate knowledge and skills both within and across technical subjects in a range of complex business scenarios.
Candidates will also be required to apply professional knowledge using more advanced skills in the technical integration modules. These professional skills are then examined to a greater extent in the final
Taxation 2
ACA module: the Case Study. This module requires higher level cognitive skills, analytical and evaluative skills and emphasises the importance of communication and articulation skills.
Assessment
The two technical integration modules will be examined using traditional paper based assessments. Each paper based exam will be 3.5 hours in length. These exams will contain questions requiring the integration of knowledge both within technical disciplines and across technical disciplines. Questions integrated across all subject streams are an essential step towards the Case Study but will generally have more structure and guidance than those at the Case Study.
The Case Study will continue in its present format of a four hour written exam with ‘advance information’ provided to candidates ahead of the exam and ‘impact information’ issued in the exam, containing the Case Study requirements.
Flexibility
There are no regulations stipulating the order in which candidates must attempt the technical integration modules. The Case Study must be the final module attempted and can only be attempted in the final year of a training contract.
There is no restriction on the number of attempts permitted at each advanced stage module.
Open Book Policy
Candidates may take any written or printed material into the exam hall subject to practical space restrictions.
Study guide 3
2 Aim of the papers and specification grid
2.1 Module aim The aim of the Business Reporting paper is:
To ensure that candidates can apply analysis techniques, technical knowledge and professional skills to resolve real-life compliance issues faced by businesses.
Candidates may be put, for example, in the role of a preparer of financial statements, or other corporate reports such as on sustainability and corporate responsibility, an advisor or in an assurance role facing business issues where there are reporting implications. Compliance issues relating to taxation will also feature in this module.
Candidates will be required to use professional judgement to identify and evaluate alternatives and determine the appropriate solution(s) to compliance issues, giving due consideration to the commercial impact of their recommendations.
The aim of the Business Change paper is:
To ensure that candidates can provide technical advice in respect of issues arising in business transformations, mergers, acquisitions, alliances and disposals.
Candidates will be required to analyse and interpret both external and internal financial and non-financial data in order to plan for change and provide advice. In undertaking this analysis candidates will be expected to evaluate the impact of stakeholder influences on the data, including the impact of choice of reporting policies.
Taxation and practical business techniques are particularly important in this module, where business techniques include aspects of business strategy, business finance, performance management and costing. There will also be financial reporting, assurance, ethical and legal implications to be considered when developing and assessing strategic and business plans.
2.2 Specification grid This grid is a general guide as to the subject matter within this module and assessment coverage over a period of time.
BR BC Weighting (%) Weighting (%) Ethics and law 5 – 10 5 – 10 Taxation 20 – 30 25 – 35 Audit and assurance 30 – 40 10 – 20 Corporate reporting 30 – 40 15 – 25 Business analysis 0 30 – 35
Taxation 4
3 Study guide
3.1 Help yourself study for your ACA exams The right approach
1 Develop the right attitude
Believe in yourself Yes, there is a lot to learn. But thousands have succeeded before and you can too.
Remember why you're doing it You are studying for a good reason: to advance your career.
2 Focus on the exam
Read through the Syllabus in this guide
This tells you what you are expected to know.
3 The right method
See the whole picture Keeping in mind how all the detail you need to know fits into the whole picture will help you understand it better.
The Practical significance and Working context to each chapter in the study guide put the material into context.
The Learning objectives and Section overviews in the Study Manual show you what you need to grasp.
Use your own words To absorb the information (and to practise your written communication skills), you need to put it into your own words.
Take notes. Answer the questions in each chapter. Draw mindmaps. Try 'teaching' a subject to a colleague or friend.
Give yourself cues to jog your memory
The Study Manual uses bold to highlight key points.
Try colour coding with a highlighter pen. Write key points on cards.
4 The right recap
Review, review, review Regularly reviewing a topic in summary form can fix it in your memory. The Study Manual helps you review in many ways.
Each Chapter Summary will help you to recall that study session.
The Self-test actively tests your grasp of the essentials.
Go through the Examples in each chapter a second or third time.
Study guide 5
3.2 Study cycle The best way to approach the Study Manual is to tackle the chapters in order. We will look in detail at how to approach each chapter below but as a general guide, taking into account your individual learning style, you could follow this sequence for each chapter.
Key study steps Activity
Step 1 Topic list
This topic list is shown in the contents for each chapter and helps you navigate each part of the book; each numbered topic is a numbered section in the chapter.
Step 2 Introduction
The practical significance and working context sections for each chapter set out in this study guide give you the big picture in terms of the context of the chapter. The Examination context guidance shows what the examiners are looking for and tells you why the topics covered in the chapter need to be studied.
Step 3 Section overviews
Section overviews give you a quick summary of the content of each of the main chapter sections. They can also be used at the end of each chapter to help you review each chapter quickly.
Step 4 Explanations
Proceed methodically through each chapter, particularly focusing on areas highlighted as significant in the chapter introduction or study guide.
Step 5 Note taking
Take brief notes, if you wish. Don't copy out too much. Remember that being able to record something yourself is a sign of being able to understand it. Your notes can be in whatever format you find most helpful lists, diagrams, mindmaps.
Step 6 Examples
Work through the examples very carefully as they illustrate key knowledge and techniques.
Step 7 Answers
Check yours against the suggested solutions, and make sure you understand any discrepancies.
Step 8 Chapter summary
Review it carefully, to make sure you have grasped the significance of all the important points in the chapter.
Step 9 Self-test
Use the Self-test to check how much you have remembered of the topics covered.
Step 10 Learning objectives
Ensure you have ticked off the Learning objectives.
Moving on...
When you are ready to start revising, you should still refer back to the Study Manual.
As a source of reference (you should find the index particularly helpful for this).
As a way to review (the Section Overviews, Examination Context, Chapter Summaries and Self-test questions help you here).
Remember to keep careful hold of the Study Manual – you will find it invaluable in your work.
Taxation 6
Stud
y gu
ide
7
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
D
ate
1 C
orpo
ratio
n ta
x is
cal
cula
ted
on a
n in
divi
dual
com
pany
bas
is. T
he p
rofit
sh
own
in t
he a
ccou
nts
is t
he s
tart
ing
poin
t, b
ut t
he t
axab
le t
otal
pro
fit is
of
ten
a ve
ry d
iffer
ent
figur
e.
The
effe
ctiv
e ra
te o
f tax
pai
d by
co
mpa
nies
has
bec
ome
very
impo
rtan
t in
rec
ent
year
s as
boa
rds
of d
irect
ors
are
judg
ed o
n th
eir
tax
perf
orm
ance
as
wel
l as
the
ir tr
adin
g pr
ofits
. A t
ax r
ate
whi
ch
is t
oo h
igh
may
indi
cate
tha
t th
e co
mpa
ny m
ay b
e m
issi
ng t
ax r
elie
fs a
nd
cred
it op
port
uniti
es; t
oo lo
w a
nd it
may
be
acc
used
of s
hirk
ing
its c
orpo
rate
re
spon
sibi
lity
to p
ay it
s ‘fa
ir sh
are’
. C
ompa
nies
with
inve
stm
ent
busi
ness
ea
rn t
heir
pro
fits
from
diff
eren
t ty
pes
of
activ
ity t
o tr
adin
g co
mpa
nies
, but
the
ta
x is
cal
cula
ted
usin
g th
e sa
me
basi
c p
rinci
ple
s as
for
a tr
adin
g co
mp
any.
Th
e SS
E ha
s be
en o
ne o
f the
mos
t p
opul
ar r
elie
fs in
trod
uced
in t
he p
ast
few
yea
rs. I
t al
low
s fo
r si
gnifi
cant
sh
areh
oldi
ngs
to b
e di
spos
ed o
f w
ithou
t at
trac
ting
a ch
arge
to
corp
orat
ion
tax
on t
he g
ains
aris
ing.
Sto
p a
nd
th
ink
Are
all c
ompa
nies
eng
aged
in s
ome
kind
of
R&
D e
xpen
ditu
re a
war
e of
the
pote
ntia
l ben
efit
from
the
asso
ciat
ed ta
x re
lief?
Is it
pos
sibl
e fo
r a
com
pan
y to
p
ay t
ax a
t to
o lo
w a
rat
e?
Mos
t U
K co
mp
anie
s ha
ve t
axab
le
tota
l pro
fits
and
mus
t p
ay U
K co
rpor
atio
n ta
x as
a r
esul
t. M
ost
com
pani
es w
ould
pro
babl
y pr
efer
to
pay
as
little
tax
as
pos
sibl
e bu
t do
not
ne
cess
arily
alw
ays
unde
rsta
nd t
he
com
ple
xitie
s of
the
UK
taxa
tion
syst
em. I
nste
ad, t
hey
rely
on
accu
rate
an
d up
-to-
date
tec
hnic
al k
now
ledg
e fr
om p
rofe
ssio
nal a
dvis
ers.
Man
y da
y to
day
bus
ines
s de
cisi
ons
will
hav
e an
imp
act
on t
he U
K ta
x po
sitio
n an
d it
is e
ssen
tial t
hat
prof
essi
onal
adv
iser
s ar
e in
volv
ed in
th
ese
so t
hat
the
tax
impl
icat
ions
can
be
tak
en in
to a
ccou
nt.
Read
thr
ough
cha
pter
one
of t
he
stud
y m
anua
l qui
ckly
as
it is
mos
tly
revi
sion
from
Pro
fess
iona
l Sta
ge b
ut
note
the
tre
atm
ent
of d
ivid
ends
re
ceiv
ed b
y co
mp
anie
s, t
he c
apita
l al
low
ance
s ru
les,
the
cha
nges
to
the
R&D
rul
es, a
nd t
he lo
ss r
elie
f p
rovi
sion
s, p
artic
ular
ly t
he w
orke
d ex
amp
le o
n te
rmin
al lo
ss r
elie
f.
Fina
lly w
ork
thro
ugh
the
self-
test
q
uest
ions
car
eful
ly t
o en
sure
tha
t yo
u ha
ve g
rasp
ed t
he m
ain
poi
nts
in t
he
chap
ter.
Any
are
as w
hich
are
unc
lear
sh
ould
be
addr
esse
d no
w a
s th
e ne
xt
six
chap
ters
rel
ate
to c
orpo
ratio
n ta
x an
d ta
ke t
he fu
ndam
enta
l kno
wle
dge
in t
his
chap
ter
furt
her.
This
cha
pter
is la
rgel
y re
visi
on
from
Pro
fess
iona
l Sta
ge a
nd
pro
vide
s th
e ba
sis
for
the
next
si
x ch
apte
rs o
f thi
s st
udy
man
ual.
Esse
nti
al
po
ints
Tax
trea
tmen
t of
div
iden
ds
rece
ived
from
bot
h U
K an
d ov
erse
as c
ompa
nies
Enha
nced
def
initi
on o
f as
soci
ates
R&D
and
R&
D t
ax c
redi
ts
Tax
trea
tmen
t of
inta
ngib
le
fixed
ass
ets
REIT
s, A
IFs
and
use
of e
xpen
ses
of m
anag
emen
t
Loss
rel
ief e
spec
ially
ter
min
al
loss
rel
ief a
nd u
se o
f los
ses
with
a c
hang
e in
ow
ners
hip
SSE
– hi
ghly
exa
min
able
but
ea
sily
mis
sed
CT
adm
in –
you
last
stu
died
th
is a
t Kn
owle
dge
leve
l of
Prof
essi
onal
Sta
ge. Y
ou s
houl
d be
abl
e to
dis
cuss
tax
pay
men
t da
tes
and
pena
lties
eg
in lo
ss
ques
tions
. Ref
er b
ack
to t
he
final
wor
ked
exam
ple
in s
ectio
n 5.
1 to
und
erst
and
how
thi
s kn
owle
dge
coul
d be
bro
ught
in
to T
I
Taxa
tio
n
8 Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
D
ate
2 A
com
pan
y ha
s a
num
ber
of o
ptio
ns
avai
labl
e to
rai
se fu
nds.
Mos
t of
the
fa
ctor
s to
be
cons
ider
ed in
dec
idin
g w
hich
bes
t su
its t
he c
ircum
stan
ces
of a
bu
sine
ss h
ave
noth
ing
to d
o w
ith t
ax.
How
ever
, the
tax
con
seq
uenc
es o
f ch
oosi
ng d
ebt
will
be
very
diff
eren
t fr
om is
suin
g ne
w e
qui
ty s
hare
s.
The
EIS
and
VCT
are
both
sch
emes
w
hich
can
att
ract
indi
vidu
al in
vest
ors
to in
vest
in c
ompa
nies
see
king
mon
ey
for
deve
lop
men
t an
d ex
pan
sion
. The
se
have
pro
ved
very
suc
cess
ful.
Thes
e ha
ve b
een
amen
ded
in F
A 2
012
to
incr
ease
the
am
ount
s w
hich
com
pani
es
can
rais
e an
d e
xten
d re
lief t
o la
rger
co
mpa
nies
. A n
ew S
EIS
relie
f has
als
o be
en in
trod
uced
for
inve
stor
s in
sm
alle
r, s
tart
-up
com
pan
ies.
Exte
rnal
fina
nce
has
pre
viou
sly
been
us
ed b
y so
me
com
pani
es t
o re
duce
th
eir
tax
bills
und
er s
omew
hat
artif
icia
l ta
x av
oida
nce
sche
mes
. The
dis
clos
ure
regi
me
for
tax
avoi
danc
e ha
s ho
wev
er
sign
ifica
ntly
red
uced
the
sco
pe
for
this
.
Sto
p a
nd
th
ink
Wha
t is
the
op
timum
sou
rce
of
finan
ce?
Are
sha
reho
lder
s le
ss
pow
erfu
l tha
n le
nder
s? S
houl
d ta
xatio
n al
one
dete
rmin
e w
hich
is t
he b
ette
r so
urce
of f
inan
ce?
Ther
e ha
ve b
een
man
y at
tem
pts
to
set
up c
omp
lex
avoi
danc
e sc
hem
es
whi
ch m
ake
use
of t
he lo
an
rela
tions
hips
rul
es, b
ut t
he
gove
rnm
ent
has
acte
d sw
iftly
to
legi
slat
e an
d ha
s no
w s
ucce
ssfu
lly
stop
ped
man
y of
the
se s
chem
es.
One
of t
he m
ost
imp
orta
nt t
asks
for
the
acco
unta
nt is
to
ensu
re t
hat
the
tax
cons
eque
nces
of r
aisi
ng lo
an
finan
ce a
re c
onsi
dere
d in
adv
ance
of
rath
er t
han
afte
r th
e ev
ent.
If yo
u ar
e ad
visi
ng a
pot
entia
l in
vest
or w
ho is
hop
ing
to c
laim
EIS
, VC
T or
SEI
S re
lief,
it is
impo
rtan
t to
ch
eck
that
the
com
pan
y its
elf w
ill
qua
lify
and
has
not
exce
eded
the
lim
its.
Read
sec
tion
one.
Cou
ld y
ou a
pp
ly
the
loan
rel
atio
nshi
p ru
les
to d
iffer
ent
type
s of
inte
rest
inco
me
and
exp
ense
.
Revi
ew t
he im
plic
atio
ns o
f fin
anci
ng
via
debt
or
equi
ty in
sec
tion
two.
N
ote
the
inte
ract
ion
with
thi
n ca
pita
lisat
ion
and
the
wor
ld-w
ide
debt
cap
pro
visi
ons
in c
hapt
er s
ix.
Sect
ion
thre
e ex
plai
ns t
he s
chem
es
whi
ch e
ncou
rage
ven
ture
cap
ital
inve
stm
ents
by
prov
idin
g ta
x re
lief t
o in
vest
ors.
You
sho
uld
ensu
re y
ou c
an
appl
y th
e kn
owle
dge
in t
he in
tera
ctiv
e qu
estio
ns.
Read
sec
tion
four
and
ens
ure
you
can
corr
ectly
allo
cate
fore
ign
exch
ange
ga
ins
and
loss
es t
o tr
adin
g p
rofit
s or
no
n-tr
adin
g lo
an r
elat
ions
hip
s.
Sect
ion
five
exp
lain
s th
e ta
xatio
n im
plic
atio
ns o
f lea
sing
to
finan
ce t
he
purc
hase
of p
lant
and
mac
hine
ry.
The
area
is t
opic
al a
s it
inte
ract
s w
ith
corp
orat
e re
por
ting.
Lea
rn t
he
defin
ition
of a
long
fund
ing
leas
e.
Fina
lly, a
ttem
pt t
he s
elf t
est
ques
tions
at
the
end
of t
he c
hapt
er. T
his
chap
ter
cont
ains
top
ics
whi
ch a
re li
kely
to
be
exam
ined
in a
n op
en-e
nded
way
re
quiri
ng y
ou t
o th
ink
abou
t po
ssib
le
area
s of
the
syl
labu
s w
hich
cou
ld
appl
y to
the
que
stio
n. A
t th
is s
tage
the
se
lf-te
st q
uest
ions
may
see
m h
ard.
Deb
t fin
anci
ng in
tera
cts
with
th
in c
apita
lisat
ion
whi
ch is
ex
pla
ined
in c
hap
ter
six,
co
rpor
ate
anti-
avoi
danc
e.
Con
side
ring
how
to
finan
ce a
bu
sine
ss w
ill a
lso
be c
ritic
al t
o an
y re
stru
ctur
ing
or
tran
sfor
mat
ion
of a
n or
gani
satio
n, t
his
is e
xpla
ined
in
cha
pter
six
teen
.
Esse
nti
al
po
ints
Allo
catio
n of
inte
rest
item
s to
tr
adin
g in
com
e or
non
-tra
ding
lo
an r
elat
ions
hips
Use
of a
def
icit
on n
on-t
radi
ng
loan
rel
atio
nshi
ps
Prio
rity
of lo
ss r
elie
f cla
ims
EIS,
SEI
S an
d VC
T ru
les
EIS
and
SEIS
rei
nves
tmen
t re
lief
Cla
w b
ack
of E
IS. S
EIS
or V
CT
relie
f
Trea
tmen
t of
fore
ign
exch
ange
ga
ins
and
loss
es
Def
initi
on a
nd t
reat
men
t of
a
long
fund
ing
leas
e an
d a
non-
long
fund
ing
leas
e
Stud
y gu
ide
9
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
D
ate
3 It
is u
sual
for
larg
e or
gani
satio
ns t
o op
erat
e w
ithin
a c
orp
orat
e st
ruct
ure.
If
ther
e ar
e di
ffere
nt t
ypes
of a
ctiv
ity
with
in a
bus
ines
s or
it is
ope
rate
d in
di
ffere
nt g
eogr
aphi
cal a
reas
, a n
umbe
r of
com
pan
ies
will
be
set
up t
o m
anag
e th
e di
ffere
nt fu
nctio
ns.
Whe
re o
ne c
omp
any
with
in a
gro
up
suffe
rs a
loss
, the
gro
up a
s a
who
le
may
be
able
to
mak
e us
e of
the
loss
by
sett
ing
it ag
ains
t on
e or
mor
e of
the
ot
her
com
pani
es’ p
rofit
s.
Ther
e ar
e m
any
diffe
rent
def
initi
ons
of
a gr
oup
for
tax
pur
pos
es. D
iffer
ent
tax
relie
fs r
equi
re d
iffer
ent
stru
ctur
es
befo
re t
hey
can
be u
sed,
and
the
se a
re
not
the
sam
e de
finiti
ons
as t
hose
use
d fo
r fin
anci
al r
epor
ting.
Gro
up r
elie
f pro
visi
ons
now
ext
end
relie
f for
cer
tain
ove
rsea
s co
mpa
nies
w
ithin
a g
roup
. Thi
s ha
s m
ade
the
relie
f m
ore
flexi
ble,
and
mea
ns a
ccou
ntan
ts
have
to
have
an
inte
rnat
iona
l pe
rspe
ctiv
e.
Sto
p a
nd
th
ink
How
sho
uld
a gr
oup
mak
e us
e of
its
loss
es?
Is c
ash-
flow
an
issu
e or
sho
uld
grou
p t
axat
ion
over
all b
e m
inim
ised
? A
re m
inor
ity in
tere
sts
pre
par
ed t
o p
ay
for
the
bene
fit o
f gro
up lo
sses
?
Man
y co
mpa
nies
, par
ticul
arly
in
thos
e gr
oup
s w
hich
do
not
have
an
in-h
ouse
tax
dep
artm
ent,
rel
y on
th
eir
exte
rnal
adv
iser
s to
hel
p th
em
mak
e be
st u
se o
f los
ses.
Ther
e ar
e m
any
fact
ors
to b
e co
nsid
ered
, suc
h as
the
tim
ing
of
relie
f and
the
mar
gina
l rat
es o
f co
rpor
atio
n ta
x be
ing
pai
d by
the
di
ffere
nt g
roup
mem
bers
. The
nu
mbe
r of
com
pani
es w
ithin
a g
roup
is
crit
ical
to
esta
blis
hing
the
ap
plic
able
rat
e of
tax
, so
iden
tifyi
ng
acq
uisi
tions
and
dis
pos
als
arou
nd t
he
wor
ld is
als
o ve
ry im
por
tant
.
A fo
rm o
f gro
up lo
ss r
elie
f is
also
av
aila
ble
to m
embe
rs o
f a
cons
ortiu
m. T
he r
ules
are
sim
ilar,
but
no
t th
e sa
me
and
it is
imp
orta
nt t
o id
entif
y p
reci
sely
wha
t th
e co
rpor
ate
rela
tions
hip
s ar
e be
fore
mak
ing
any
pla
ns. N
ote
that
a g
roup
rel
ief c
laim
m
ade
by a
con
sort
ium
is c
ollo
quia
lly
know
n as
“co
nsor
tium
rel
ief”
. Cla
ims
for
cons
ortiu
m r
elie
f can
be
mad
e fo
r th
e sa
me
type
s of
loss
es a
s cl
aim
s fo
r an
y ot
her
form
of g
roup
rel
ief.
Gro
up p
aym
ent
arra
ngem
ents
can
p
rovi
de a
use
ful w
ay o
f im
pro
ving
a
grou
p’s
cash
flow
pos
ition
. The
y ca
n al
so b
e us
ed t
o m
inim
ise
the
inte
rest
bu
rden
suf
fere
d fo
r an
y la
te p
aid
tax
by t
he g
roup
as
a w
hole
.
You
mus
t un
ders
tand
the
diff
eren
ce
betw
een
the
defin
ition
of a
ssoc
iate
s (c
hap
ter
1), a
loss
rel
ief g
roup
(c
hap
ter
3), a
nd a
cha
rgea
ble
gain
s gr
oup
(ch
apte
r 4)
.
Lear
n w
hat m
ay b
e su
rren
dere
d w
ithin
a
loss
relie
f gro
up a
nd w
hich
loss
es c
an
only
be
surr
ende
red
if ex
cess
. Rev
iew
th
e im
plic
atio
ns o
f a fo
reig
n gr
oup
mem
ber.
Att
empt
inte
ract
ive
ques
tion
one.
Revi
ew t
he t
ax r
ates
and
tax
pla
nnin
g as
pec
ts o
f gro
up lo
ss r
elie
f by
com
ple
ting
inte
ract
ive
que
stio
n tw
o.
Cou
ld y
ou s
pot a
con
sort
ium
? Re
mem
ber t
o al
way
s ap
ply
the
cons
ortiu
m m
embe
r’s p
erce
ntag
e to
the
cons
ortiu
m c
ompa
ny’s
resu
lt w
hen
calc
ulat
ing
both
loss
cla
ims
and
surr
ende
rs.
Revi
ew g
roup
/con
sort
ium
com
pani
es
and
link
com
pani
es b
y ap
plyi
ng th
e ru
les
as to
whi
ch c
ompa
nies
can
su
rren
der o
r cla
im lo
sses
to y
our o
wn
stru
ctur
es. W
ork
thro
ugh
the
final
w
orke
d ex
amp
le in
sec
tion
thre
e.
Ensu
re y
ou u
nder
stan
d ho
w g
roup
pa
ymen
t ar
rang
emen
ts w
ork.
Fina
lly, w
ork
thro
ugh
the
self-
test
q
uest
ions
at
the
end
of t
he c
hap
ter.
Gro
up lo
ss r
elie
f oft
en in
tera
cts
with
cha
rgea
ble
gain
s gr
oup
s (c
hapt
er 4
) al
thou
gh n
ot a
ll co
mp
anie
s w
ill b
e m
embe
rs o
f bo
th t
ypes
of g
roup
. C
orp
orat
e tr
ansf
orm
atio
ns
(cha
pte
r 16
) an
d liq
uida
tions
(c
hap
ter
7) a
lso
have
an
imp
act
on g
roup
rel
atio
nshi
ps
and
the
surr
ende
r of
loss
es.
Esse
nti
al
po
ints
Lear
n th
e de
finiti
on o
f a lo
ss
relie
f gro
up a
nd c
omp
are
to a
ch
arge
able
gai
ns g
roup
in
chap
ter
4
Type
s of
loss
es a
nd w
hich
m
ust
be e
xces
s to
be
surr
ende
red
Cor
resp
ondi
ng a
ccou
ntin
g pe
riods
Iden
tifyi
ng a
con
sort
ium
Cal
cula
ting
the
max
imum
am
ount
of c
onso
rtiu
m r
elie
f p
ossi
ble
Att
emp
t fin
al w
orke
d ex
amp
le
in s
ectio
n th
ree
Gro
up p
aym
ent
arra
ngem
ents
Taxa
tio
n
10
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
D
ate
4 C
ompa
nies
pay
cor
pora
tion
tax
on
capi
tal g
ains
. All
com
pani
es w
ithin
a
75%
gro
up s
truc
ture
(>5
0% e
ffect
ive
owne
rshi
p), U
K re
side
nt o
r ot
herw
ise,
ar
e p
art
of a
cap
ital g
ains
gro
up.
Ass
ets
are
tran
sfer
red
arou
nd a
gro
up
at n
il ga
in/n
il lo
ss. T
here
is n
ow t
he
equi
vale
nt o
f gro
up lo
ss r
elie
f for
ca
pita
l gai
ns a
nd lo
sses
. It
is o
nly
avai
labl
e to
UK
resi
dent
com
pani
es a
nd
UK
PEs.
A g
roup
mus
t p
lan
its c
apita
l di
spos
als
to m
inim
ise
the
tax
pai
d by
th
e gr
oup
as
a w
hole
Deg
roup
ing
char
ges
can
be e
xpen
sive
w
here
a c
ompa
ny le
aves
the
gro
up
with
in s
ix y
ears
of a
n in
tra-
grou
p tr
ansf
er. H
owev
er, a
s SS
E no
w e
xem
pts
degr
oup
ing
char
ges
aris
ing
due
to
shar
e di
spos
als
whi
ch t
hem
selv
es
qual
ify fo
r SS
E, a
s w
ell a
s on
cer
tain
hi
ve-d
owns
, the
y ar
e m
uch
less
of a
n is
sue
than
the
y us
ed t
o be
.
Sto
p a
nd
th
ink
How
bes
t ca
n th
e ca
pita
l gai
n an
d lo
sses
on
the
disp
osal
of a
sset
s be
m
atch
ed t
o en
sure
tha
t gr
oup
gain
s ov
eral
l can
be
min
imis
ed?
How
sho
uld
acq
uisi
tions
and
dis
pos
als
be t
imed
to
max
imis
e th
e op
por
tuni
ty
for
grou
p-w
ide
rollo
ver
relie
f?
Man
y gr
oups
hav
e la
rge
port
folio
s of
p
rop
erty
and
sha
re in
vest
men
ts. A
dd
to t
his
othe
r ch
arge
able
ass
ets
such
as
goo
dwill
(if
pre
1 A
pril
200
2 go
odw
ill),
and
in p
ract
ice
this
can
le
ad t
o co
mp
lex
calc
ulat
ions
.
Ther
e ha
ve b
een
man
y at
tem
pts
to
set
up c
omp
lex
avoi
danc
e sc
hem
es
to m
ake
use
for
exam
ple
of p
re-e
ntry
ca
pita
l los
ses,
or
to c
onve
rt in
com
e in
to c
apita
l, bu
t th
e go
vern
men
t ha
s no
w s
ucce
ssfu
lly le
gisl
ated
to
stop
m
any
of t
hese
sch
emes
.
One
of t
he m
ost
imp
orta
nt t
asks
for
the
acco
unta
nt is
to
ensu
re t
hat
the
tax
cons
eque
nces
of a
pla
nned
re
stru
ctur
ing
are
cons
ider
ed in
ad
vanc
e of
rat
her
than
aft
er t
he
even
t.
Read
qui
ckly
thr
ough
sec
tion
one
of
chap
ter
four
. It
is c
ritic
al t
o yo
ur
unde
rsta
ndin
g.
Sect
ion
two
shou
ld a
lso
be m
ainl
y re
visi
on. D
egro
upin
g ch
arge
s ar
e hi
ghly
exa
min
able
at
this
leve
l. Th
ere
wer
e ch
ange
s to
the
rul
es in
FA
2011
. W
ork
thro
ugh
thes
e ca
refu
lly a
s th
ey
will
be
rele
vant
in a
ny c
orp
orat
e tr
ansf
orm
atio
n qu
estio
n (s
ee la
ter
in
chap
ter
16).
Pre
-ent
ry c
apita
l los
ses
are
also
hig
hly
exam
inab
le .
Aga
in
ther
e w
ere
chan
ges
in t
he r
ules
in
FA20
11. U
se in
tera
ctiv
e q
uest
ion
one
to t
est
your
und
erst
andi
ng.
Qui
ckly
rev
iew
the
tra
nsfe
r of
oth
er
asse
ts in
sec
tion
thre
e.
Revi
ew g
roup
rol
love
r re
lief.
The
final
se
ctio
n on
suc
cess
ion
to t
rade
is a
lso
high
ly e
xam
inab
le a
t th
is le
vel a
nd
will
be
revi
site
d in
cha
pter
16.
Ens
ure
you
can
reco
gnis
e w
hen
a su
cces
sion
oc
curs
and
its
imp
licat
ions
. Qui
ckly
re
view
the
impl
icat
ions
for
loss
es
tran
sfer
red.
Th
e se
lf-te
st q
uest
ions
at
the
end
of
the
chap
ter
cove
r th
e m
ost
impo
rtan
t po
ints
lear
nt s
o fin
ish
the
chap
ter
by
wor
king
thr
ough
the
m.
Gro
up g
ains
gen
eral
ly in
tera
ct
with
gro
up lo
sses
(ch
apte
r 3)
an
d gr
oup
tra
nsfo
rmat
ions
(c
hap
ter
16).
Not
e th
at, t
he
liqui
datio
n of
a c
omp
any
has
no im
pact
on
char
geab
le g
ains
gr
oup
s (c
hap
ter
7).
Esse
nti
al
po
ints
Lear
n th
e de
finiti
on o
f a
char
geab
le g
ains
gro
up a
nd
com
par
e to
a lo
ss r
elie
f gro
up
in c
hapt
er 3
Impl
icat
ions
of n
il ga
in/n
il lo
ss
tran
sfer
s of
ass
ets
and
tran
sfer
of
gai
ns a
nd lo
sses
aro
und
the
grou
p.
Deg
roup
ing
char
ges
Pre-
entr
y ca
pita
l los
ses
Gro
up r
ollo
ver
relie
f
Succ
essi
ons
Stud
y gu
ide
11
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
D
ate
5 Bu
sines
s is
incr
easin
gly
glob
al in
nat
ure.
Ad
vanc
es in
tech
nolo
gy, a
nd e
spec
ially
th
e u
se o
f tra
ding
thro
ugh
the
inte
rnet
ha
ve c
reat
ed re
al c
halle
nges
for t
he ta
x au
thor
ities
bot
h in
the
UK
and
else
whe
re.
A c
ompa
ny’s
res
iden
cy d
icta
tes
whi
ch
coun
try
may
col
lect
tax
on
its p
rofit
s.
How
ever
, det
erm
inin
g w
here
a
com
pany
is r
esid
ent
is n
ot a
s si
mpl
e as
de
term
inin
g w
here
its
head
offi
ce is
lo
cate
d.
Whe
re a
com
pany
ope
rate
s bo
th in
the
U
K an
d ov
erse
as, i
t m
ay s
uffe
r bo
th U
K ta
x an
d fo
reig
n ta
x. It
will
cla
im r
elie
f via
a
doub
le t
ax t
reat
y, o
r vi
a un
ilate
ral
relie
f in
the
abse
nce
of a
tre
aty.
D
oubl
e ta
x tr
eatie
s ar
e co
nven
tions
be
twee
n tw
o co
untr
ies
and
aim
to
elim
inat
e th
e do
uble
tax
atio
n of
inco
me
or g
ains
aris
ing
in o
ne t
errit
ory
and
paid
to
res
iden
ts o
f ano
ther
ter
ritor
y. T
hey
wor
k by
div
idin
g th
e ta
x rig
hts
over
the
sa
me
inco
me
and
gain
s, c
laim
ed b
y ea
ch o
f the
cou
ntrie
s.
Sto
p a
nd
th
ink
Wha
t sho
uld
dete
rmin
e w
here
a
com
pany
is lo
cate
d? H
ow s
houl
d a
new
ov
erse
as b
usin
ess
be s
truc
ture
d? H
ow
impo
rtan
t sho
uld
taxa
tion
be in
mak
ing
such
dec
ision
s? C
an d
oubl
e ta
xatio
n be
av
oide
d by
sim
ply
trad
ing
in c
ount
ries
with
whi
ch th
e U
K ha
s ag
reed
a d
oubl
e ta
xatio
n tr
eaty
?
Com
pany
res
iden
ce is
no
long
er ju
st
a co
ncer
n fo
r la
rge
inte
rnat
iona
l co
nglo
mer
ates
. The
exi
sten
ce o
f a
perm
anen
t es
tabl
ishm
ent
(PE)
will
us
ually
det
erm
ine
whe
re p
rofit
s ar
e ta
xed
and
you
will
nee
d to
look
out
fo
r si
gns
of in
war
d an
d ou
twar
d m
igra
tion
in a
ll bu
sine
sses
.
You
will
als
o ne
ed t
o be
aw
are
of
how
a b
usin
ess
uses
the
inte
rnet
to
exp
and
sale
s an
d to
und
erst
and
how
th
is m
ay c
reat
e an
inte
rnat
iona
l di
men
sion
to
its t
ax a
ffairs
.
In t
he a
bsen
ce o
f a t
reat
y, u
nila
tera
l re
lief m
ust
be u
sed,
eith
er b
y al
low
ing
a cr
edit
for
the
fore
ign
tax
suffe
red,
or
by d
educ
ting
the
fore
ign
tax
as a
n ex
pen
se. Y
ou w
ill n
eed
to
cons
ider
whe
ther
a t
reat
y ap
plie
s an
d th
en, i
f not
, to
use
a fo
rm o
f un
ilate
ral r
elie
f.
This
is a
spe
cial
ist
area
and
in c
ases
w
hich
are
not
str
aigh
tfor
war
d, y
ou
are
likel
y to
see
k ad
vice
from
so
meo
ne w
ho d
eals
reg
ular
ly w
ith
inte
rnat
iona
l tax
mat
ters
.
For
up-t
o-da
te in
form
atio
n, t
he
ICA
EW li
brar
y ha
s a
usef
ul r
efer
ence
se
ctio
n (f
ound
at
http
://w
ww
.icae
w.c
om/i
ndex
.cfm
/ro
ute/
1547
93/i
caew
_ga/
en/L
ibra
ry/L
inks
/Tax
/Int
erna
tiona
l_ta
x/In
tern
atio
nal
_Tax
)
Read
qui
ckly
thr
ough
sec
tion
one
of
chap
ter
five.
E-c
omm
erce
is s
till t
opic
al
so e
nsur
e yo
u co
uld
answ
er a
di
scur
sive
que
stio
n ex
plai
ning
a
com
pany
’s r
esid
ency
sta
tus.
Brie
fly r
evie
w s
ectio
n tw
o.
Sect
ion
thre
e is
diff
icul
t. E
nsur
e yo
u un
ders
tand
the
bas
ic c
once
pts
. You
sh
ould
wor
k th
roug
h al
l of t
he
wor
ked
exam
ple
s ve
ry c
aref
ully
.
Sect
ion
four
is h
ighl
y ex
amin
able
. En
sure
you
fully
und
erst
and
the
imp
licat
ions
of c
hoic
e of
ove
rsea
s tr
adin
g st
ruct
ure.
Ens
ure
you
unde
rsta
nd t
he b
asic
impl
icat
ions
of
inco
rpor
atin
g an
ove
rsea
s PE
. Wor
k th
roug
h in
tera
ctiv
e qu
estio
n on
e.
Read
sec
tion
five
and
lear
n th
e th
ree
met
hods
of o
btai
ning
DTR
. Ens
ure
you
unde
rsta
nd h
ow fo
reig
n in
com
e is
tax
ed a
nd in
par
ticul
ar t
he t
ax
trea
tmen
t of
ove
rsea
s di
vide
nds.
You
sh
ould
not
e th
e w
ide
rang
ing
exem
ptio
ns a
vaila
ble
and
app
reci
ate
that
alm
ost
all d
ivid
ends
are
now
ex
emp
t fr
om c
orp
orat
ion
tax.
Mak
e su
re y
ou c
an c
alcu
late
DTR
av
aila
ble
whe
n in
com
e is
tax
ed b
oth
over
seas
and
in t
he U
K.
Fini
sh t
he c
hapt
er b
y at
tem
ptin
g al
l of
the
sel
f-te
st q
uest
ions
.
E-co
mm
erce
als
o ha
s co
nsid
erab
le im
plic
atio
ns fo
r VA
T (c
hap
ter
8) a
s w
ell a
s re
side
ncy.
The
use
of l
osse
s (c
hap
ter
1) is
als
o cr
itica
l in
the
deci
sion
as
to t
he c
hoic
e of
bu
sine
ss s
truc
ture
whe
n fir
st
exp
andi
ng o
vers
eas.
Dou
ble
taxa
tion
relie
f for
co
mp
anie
s in
tera
cts
with
the
co
rpor
atio
n ta
x co
mp
utat
ion
(cha
pte
r 1)
.
Esse
nti
al
po
ints
Resi
denc
e
Resi
denc
e an
d e-
com
mer
ce
Def
initi
on o
f a P
E an
d ho
w it
is
taxe
d in
the
UK
Com
pany
mig
ratio
n
Cho
ice
of o
vers
eas
busi
ness
st
ruct
ure
Inco
rpor
atin
g an
ove
rsea
s PE
Taxa
tion
of fo
reig
n in
com
e an
d D
TR
Taxa
tio
n
12
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
D
ate
6 A
lthou
gh t
he m
ain
UK
rate
of
corp
orat
ion
tax
mig
ht s
eem
low
, man
y ot
her
coun
trie
s ha
ve m
uch
low
er r
ates
w
hich
mak
e ov
erse
as o
pera
tions
ver
y at
trac
tive.
Pro
fits
of a
non
-UK
resi
dent
su
bsid
iary
wou
ld n
orm
ally
be
outs
ide
the
scop
e of
UK
corp
orat
ion
tax.
To
avoi
d U
K co
mp
anie
s m
anip
ulat
ing
thei
r af
fairs
to
take
adv
anta
ge o
f thi
s, a
nti-
avoi
danc
e le
gisl
atio
n ex
ists
.
CFC
rul
es t
ax a
UK
par
ent
com
pan
y on
ce
rtai
n ty
pes
of p
rofit
s of
non
-UK
subs
idia
ries.
The
se a
re t
ypic
ally
tra
ding
pr
ofits
whi
ch h
ave
a st
rong
UK
conn
ectio
n, a
nd fi
nanc
ing
inco
me.
C
redi
t is
giv
en fo
r an
y ta
x p
aid
by t
he
non-
UK
subs
idia
ry.
Vario
us e
xcep
tions
exi
st e
g a
de
min
imis
tes
t. T
here
are
als
o ru
les
whi
ch
limit
the
amou
nt w
hich
is t
axed
in
rela
tion
to c
erta
in in
tra-
grou
p lo
ans
to
the
low
er o
f 25%
of t
he in
tere
st o
n th
e lo
ans
and
the
grou
p’s
net
UK
inte
rest
de
duct
ion.
Sto
p a
nd
th
ink
Did
you
rea
lise
at P
rofe
ssio
nal S
tage
th
at c
lose
com
pan
y ru
les
wer
e a
form
of
ant
i-avo
idan
ce le
gisl
atio
n? W
ould
it
be b
ette
r to
am
end
the
sour
ce o
f the
at
tem
pte
d an
ti-av
oida
nce
or c
ontin
ue
to p
rodu
ce a
nti-a
void
ance
legi
slat
ion?
Man
y sm
all f
amily
bus
ines
ses
oper
ate
as a
com
pany
. With
fam
ily o
wne
d co
mpa
nies
alw
ays
cons
ider
whe
ther
th
e cl
ose
com
pany
rule
s ap
ply.
Th
ese
exist
to s
top
the
owne
rs u
sing
loan
s fr
om th
e co
mpa
ny, o
r usin
g ot
her c
ompa
ny a
sset
s w
ithou
t pay
ing
tax
on th
em a
s ta
xabl
e be
nefit
s or
pa
ying
out
div
iden
ds. Y
ou s
houl
d lo
ok
out f
or o
verd
raw
n di
rect
ors’
cur
rent
ac
coun
ts, w
hich
will
cou
nt a
s a
loan
on
whi
ch s
. 455
CTA
201
0 ta
x m
ay b
e pa
yabl
e.
Intr
a gr
oup
sale
s or
oth
er b
usin
ess
arra
ngem
ents
can
affe
ct w
here
pro
fits
arise
. The
tran
sfer
pric
ing
rule
s re
quire
pr
ofits
to b
e ad
just
ed if
they
hav
e be
en
unde
rsta
ted
as a
resu
lt of
non
arm
’s
leng
th p
rices
. Doc
umen
tary
evi
denc
e to
sup
port
the
pric
es u
sed
mus
t be
mai
ntai
ned.
A
fter
a lo
ng p
erio
d of
con
sulta
tion,
FA
20
12 in
trod
uced
com
plet
ely
new
CFC
ru
les,
whi
ch a
pply
from
1 Ja
nuar
y 20
13. A
ny c
lient
s w
ith o
vers
eas
subs
idia
ries
will
nee
d to
con
sider
thei
r im
pact
.
Read
qui
ckly
thr
ough
sec
tion
one
of
chap
ter
six
as it
is r
evis
ion
of
Prof
essi
onal
Sta
ge. R
emem
ber
tha
t m
ost
fam
ily r
un c
ompa
nies
will
be
clos
e. N
ote
sect
ion
1.4
on q
ualif
ying
in
tere
st. I
n se
ctio
n 1.
6 co
nsid
er t
he
inte
ract
ion
of b
eing
clo
se w
ith
ceas
ing
to t
rade
or
liqui
datin
g (s
ee
chap
ter
7).
Read
thr
ough
sec
tion
two
on C
FCs.
N
ote
that
thi
s in
tera
cts
with
cor
pora
te
repo
rtin
g. E
nsur
e yo
u un
ders
tand
the
te
chni
cal a
spec
ts o
f bot
h m
odul
es.
Read
thr
ough
sec
tions
thr
ee a
nd fo
ur
on t
rans
fer
pric
ing
and
the
prov
isio
n of
loan
fina
nce.
At
this
leve
l thi
s is
hi
ghly
top
ical
. It
inte
ract
s w
ith g
roup
re
latio
nshi
ps, f
orei
gn a
spec
ts o
f tax
an
d de
bt fi
nanc
ing.
Fini
sh t
he c
hapt
er b
y at
tem
ptin
g th
e se
lf-te
st q
uest
ions
.
Cor
por
ate
anti-
avoi
danc
e le
gisl
atio
n st
ems
from
the
ut
ilisa
tion
of t
axat
ion
law
for
unin
tend
ed p
urp
oses
. C
lose
com
pan
y le
gisl
atio
n p
reve
nts
abus
e of
the
co
rpor
ate
stru
ctur
e. C
FC
legi
slat
ion
pre
vent
s ab
use
of
resi
denc
y ru
les.
Tra
nsfe
r pr
icin
g le
gisl
atio
n pr
even
ts
abus
e of
cor
por
ate
resi
denc
y.
Thin
cap
italis
atio
n an
d th
e w
orld
-wid
e de
bt le
gisl
atio
n pr
even
t ab
use
of in
tere
st a
s a
dedu
ctib
le e
xpen
se.
Esse
nti
al
po
ints
Re
cogn
ition
of c
lose
co
mp
anie
s an
d im
plic
atio
ns
Qua
lifyi
ng in
tere
st
Reco
gnis
e C
IHC
Re
cogn
ise
a C
FC a
nd
unde
rsta
nd h
ow a
nd w
hen
to
appo
rtio
n pr
ofits
Re
cogn
ise
whe
n tr
ansf
er
pric
ing
adju
stm
ents
are
re
qui
red
Reco
gnis
e th
in c
apita
lisat
ion
and
its im
plic
atio
ns
Reco
gnis
e w
hen
wor
ld-w
ide
debt
cap
res
tric
tions
may
ap
ply
and
the
adj
ustm
ents
re
qui
red
Stud
y gu
ide
13
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
D
ate
7 M
any
thou
sand
s of
new
com
pani
es a
re
set
up e
ach
mon
th. H
owev
er, m
any
are
also
wou
nd u
p o
r si
mp
ly c
ease
tra
ding
.
In p
ract
ice,
not
all
com
pani
es in
thi
s po
sitio
n w
ill h
ave
been
suf
ferin
g lo
sses
. So
met
imes
, the
ow
ners
of a
fam
ily
com
pan
y ju
st w
ant
to r
etire
but
the
re
is n
o on
e w
illin
g an
d ab
le t
o bu
y th
e bu
sine
ss fr
om t
hem
as
a go
ing
conc
ern.
Thi
s ha
s be
en s
omet
hing
w
hich
con
cern
s go
vern
men
ts
thro
ugho
ut E
urop
e an
d th
ere
has
been
m
uch
acad
emic
res
earc
h in
to h
ow t
he
prob
lem
of s
ucce
ssfu
l bus
ines
s su
cces
sion
s ca
n be
res
olve
d.
The
abili
ty o
f a c
omp
any
to b
uy b
ack
its o
wn
shar
es fr
om s
hare
hold
ers
can
be v
ery
usef
ul. I
t ha
s m
any
prac
tical
us
es: b
uyin
g sh
ares
from
a d
issi
dent
sh
areh
olde
r, b
uyin
g sh
ares
from
a
retir
ing
sha
reho
lder
, pay
ing
back
su
rplu
s ca
sh h
eld
by t
he c
omp
any,
or
as p
art
of a
maj
or r
estr
uctu
ring
exer
cise
.
Sto
p a
nd
th
ink
Why
wou
ld a
com
pan
y ch
oose
to
repu
rcha
se it
s ow
n sh
ares
?
Is it
pos
sibl
e to
ben
efit
from
tax
p
lann
ing
durin
g a
liqui
datio
n?
As
the
UK
econ
omy
has
ente
red
a re
cess
ion,
mor
e co
mpa
nies
hav
e an
d ar
e lik
ely
to c
ontin
ue t
o fa
il. T
hose
w
hich
are
forc
ed in
to li
quid
atio
n th
roug
h ad
vers
e tr
adin
g co
nditi
ons
will
hav
e a
num
ber
of t
ax p
lann
ing
optio
ns o
pen
to
them
. Los
s re
lief,
the
timin
g of
ces
satio
n an
d w
hat
can
be
salv
aged
from
the
op
erat
ions
, eith
er
as in
divi
dual
ass
ets
or p
erha
ps e
ven
as a
via
ble
sect
ion
of t
he b
usin
ess,
are
al
l im
port
ant
cons
ider
atio
ns fo
r th
e ad
vise
r.
Thos
e co
mp
anie
s w
hich
are
forc
ed
into
liq
uida
tion
by a
thi
rd p
arty
, an
invo
lunt
ary
liqui
datio
n, h
ave
less
sc
ope
for
tax
pla
nnin
g. A
lthou
gh t
his
is a
sp
ecia
list
area
, it
is u
sefu
l to
unde
rsta
nd t
he o
ptio
ns a
vaila
ble
and
help
the
clie
nt fi
nd t
he b
est
solu
tion
to fi
t th
eir
own
circ
umst
ance
s
Sect
ion
one
of c
hapt
er s
even
pro
vide
s th
e te
chni
cal k
now
ledg
e fo
r th
e fin
al
two
sect
ions
. Ens
ure
you
unde
rsta
nd
sect
ion
one
befo
re p
roce
edin
g to
the
re
st o
f the
cha
pter
.
Repu
rcha
se o
f sha
res
owne
d by
a
com
pany
inte
ract
s w
ith t
he S
SE (
see
chap
ter
1).
Ensu
re y
ou fu
lly u
nder
stan
d th
e im
plic
atio
ns o
f ent
erin
g bo
th
adm
inis
trat
ion
and
liqui
datio
n. T
he
tax
plan
ning
poi
nts
are
the
mos
t im
port
ant
aspe
ct a
t th
is le
vel.
Rem
embe
r th
ere
is li
ttle
sco
pe fo
r ta
x pl
anni
ng in
a fo
rced
liqu
idat
ion.
Fina
lly c
ompl
ete
the
self-
test
q
uest
ions
at
the
end
of t
he c
hap
ter.
Som
e ow
ner
man
ager
s ch
oose
to
liqu
idat
e th
eir
com
pany
in
orde
r to
rev
ert
to a
n un
inco
rpor
ated
sta
tus.
C
ollo
qui
ally
thi
s is
kno
wn
as a
‘d
isin
corp
orat
ion’
and
is
cons
ider
ed fu
rthe
r in
cha
pte
r 15
. Oth
er li
quid
atio
ns m
ay
also
aris
e as
a r
esul
t of
co
rpor
ate
tran
sfor
mat
ions
or
reor
gani
satio
ns (
chap
ter
16).
Esse
nti
al
po
ints
Rep
urch
ase
of s
hare
s ow
ned
by a
com
pany
Rep
urch
ase
of s
hare
s ow
ned
by a
n in
divi
dual
– w
hen
cap
ital
dist
ribut
ion
rout
e ap
plie
s an
d w
hen
inco
me
dist
ribut
ion
rout
e ap
plie
s
Adm
inis
trat
ion
Liq
uida
tion
Gro
up r
elat
ions
hip
s in
a
liqui
datio
n –
see
diag
ram
, se
ctio
n 3.
3
Taxa
tio
n
14
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
D
ate
8 Th
e go
vern
men
t co
llect
s a
huge
p
rop
ortio
n of
its
annu
al r
even
ue in
the
fo
rm o
f VA
T w
hich
mak
es t
he t
ax
extr
emel
y im
por
tant
in p
ract
ice.
Ther
e ar
e sp
ecia
l rul
es fo
r ce
rtai
n ty
pes
of
tra
nsac
tions
, esp
ecia
lly s
ales
of
prop
erty
, whe
re m
ista
kes
can
be v
ery
cost
ly. T
he s
ale
of n
ew (
less
tha
n th
ree
year
s ol
d) c
omm
erci
al p
rope
rty
is
stan
dard
rat
ed, w
here
as it
is e
xem
pt
if it
is o
lder
. In
this
cas
e, e
xerc
isin
g th
e op
tion
to t
ax, o
r no
t, w
ill b
e an
im
por
tant
dec
isio
n.
Man
y bu
sine
sses
cha
nge
hand
s ea
ch
year
and
rem
ain
goin
g co
ncer
ns.
Prov
ided
tha
t th
e co
nditi
ons
are
all
met
, thi
s w
ill n
ot g
ive
rise
to a
VA
T ch
arge
. If a
ny o
f the
con
ditio
ns fa
il ho
wev
er, t
he r
esul
t co
uld
be c
ostly
.
Oth
er c
ount
ries
with
in t
he E
U h
ave
thei
r ow
n VA
T eq
uiva
lent
tax
es a
nd t
here
are
st
rict
rule
s go
vern
ing
how
eac
h M
embe
r St
ate
can
oper
ate
the
tax.
Sto
p a
nd
th
ink
Is t
he p
aym
ent
of t
ax o
n a
pro
per
ty
tran
sact
ion
wor
th s
ay £
10m
at
20%
si
gnifi
cant
eno
ugh
for
you
to g
ive
it du
e co
nsid
erat
ion?
The
leve
l of t
he V
AT
thre
shol
d m
eans
th
at m
any
busi
ness
es w
hich
are
larg
e en
ough
to
use
a p
rofe
ssio
nal a
dvis
er
will
nee
d to
reg
iste
r fo
r VA
T.
VAT
regi
stra
tion
brin
gs w
ith it
ext
ra
adm
inis
trat
ive
req
uire
men
ts a
nd a
lso
mea
ns t
hat
the
pric
es c
harg
ed t
o th
e ge
nera
l pub
lic w
ill b
e hi
gher
. It
may
be
ben
efic
ial t
o re
gist
er fo
r VA
T vo
lunt
arily
.
It is
imp
orta
nt t
o un
ders
tand
VA
T ac
coun
ting.
VA
T is
dea
lt w
ith d
urin
g a
busi
ness
’ acc
ount
ing
perio
d, ie
it is
a
‘rea
l tim
e’ t
ax. I
f a c
lient
is u
nsur
e ab
out
how
to
acco
unt
for
a pa
rtic
ular
tr
ansa
ctio
n, t
he p
robl
em w
ill n
eed
to
be r
esol
ved
with
in a
mat
ter
of w
eeks
. It
is n
ot a
lway
s cl
ear
from
legi
slat
ion
whe
ther
goo
ds a
re c
harg
eabl
e to
VA
T, n
or w
hat
rate
sho
uld
be u
sed.
In p
ract
ice
you
may
nee
d to
adv
ise
a cl
ient
on
the
VAT
cons
eque
nces
of a
la
rger
tra
nsac
tion,
for
exam
ple
the
sa
le o
f a b
usin
ess
as a
goi
ng c
once
rn,
whe
re s
pec
ial r
elie
f is
avai
labl
e.
If a
trad
er is
sel
ling
both
tax
able
and
ex
emp
t su
pp
lies,
the
n p
artia
l ex
empt
ion
will
app
ly a
nd y
our
advi
ce
can
help
a b
usin
ess
max
imis
e its
re
cove
rabl
e VA
T. A
bus
ines
s tr
adin
g ab
road
will
als
o ne
ed s
peci
alis
t VA
T ad
vice
.
Read
thr
ough
sec
tion
one
of c
hapt
er
eigh
t qu
ickl
y as
it s
houl
d al
l be
revi
sion
of P
rofe
ssio
nal S
tage
.
Ensu
re y
ou u
nder
stan
d VA
T on
p
rop
erty
and
VA
T in
a T
OG
C a
s th
ese
inte
ract
with
the
cap
ital g
oods
sc
hem
e in
sec
tion
two.
The
mos
t im
port
ant
poin
ts a
re c
over
ed in
in
tera
ctiv
e q
uest
ion
one
so w
ork
thro
ugh
it ca
refu
lly.
Revi
ew t
he in
tera
ctio
n of
VA
T an
d SD
LT in
sec
tion
1.4.
4.
The
inte
ract
ion
of t
he d
iffer
ent
aspe
cts
of V
AT
is p
artic
ular
ly
imp
orta
nt a
t th
is le
vel.
Att
emp
t th
e w
orke
d ex
amp
le a
t th
e en
d of
sec
tion
two.
Read
the
ove
rsea
s im
plic
atio
ns o
f VA
T.
Fina
lly c
ompl
ete
the
self-
test
q
uest
ions
at
the
end
of t
he c
hap
ter.
VAT
on p
rope
rty
inte
ract
s w
ith
Stam
p D
uty
Land
Tax
(ch
apte
r 9)
. VA
T w
ithin
a c
orp
orat
e tr
ansf
orm
atio
n w
ill b
e cr
itica
l as
VA
T on
pro
per
ty, o
r th
e sa
le
of a
tra
de w
ithin
the
sco
pe
of
VAT
will
be
cons
ider
able
.
Esse
nti
al
po
ints
VAT
grou
ps
VAT
on p
rope
rty
Op
tion
to t
ax (
OTT
)
TOG
C
Cap
ital g
oods
sch
eme
VAT
and
e-co
mm
erce
VAT
and
SDLT
Stud
y gu
ide
15
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
D
ate
9 St
amp
dut
y, s
tam
p d
uty
rese
rve
tax
and
stam
p d
uty
land
tax
are
tr
ansa
ctio
n ba
sed
taxe
s. T
he n
ame
‘sta
mp’
is h
isto
rical
sin
ce m
ost
tran
sact
ions
the
se d
ays
are
cond
ucte
d el
ectr
onic
ally
. It
usua
lly h
elp
s to
thi
nk
of t
he fi
rst
two
in r
elat
ion
to t
he
pur
chas
e of
sha
res
and
the
latt
er t
o pu
rcha
ses
of p
rope
rty.
Stam
p d
uty
rese
rve
tax
is p
ayab
le o
n th
e el
ectr
onic
tra
nsfe
r of
sha
res
and
secu
ritie
s.
Thes
e ta
xes
betw
een
them
rai
se a
larg
e su
m fo
r th
e Tr
easu
ry e
ach
year
and
can
be
ver
y ex
pen
sive
for
a bu
sine
ss. T
here
ar
e ex
empt
ions
ava
ilabl
e fo
r tr
ansa
ctio
ns s
uch
as t
hose
invo
lvin
g gi
fts
or d
ivor
ce, a
nd fo
r ce
rtai
n in
tra
grou
p t
rans
fers
of s
hare
s.
Sto
p a
nd
th
ink
Stam
p d
uty
land
tax
is p
ayab
le o
n th
e p
urch
ase
of a
ll la
nd in
clud
ing
on
inco
rpor
atio
n.
You
are
unlik
ely
to h
ave
to d
o m
uch
mor
e th
an r
ecog
nise
whe
re t
hese
ta
xes
are
rele
vant
. Be
awar
e th
at
ther
e ar
e di
ffere
nt r
ates
of s
tam
p du
ty la
nd t
ax fo
r re
side
ntia
l and
non
-re
side
ntia
l pro
per
ty. T
he n
ew 1
5%
rate
for
cert
ain
tran
sfer
s to
com
pani
es
only
ap
plie
s to
tra
nsfe
rs o
f res
iden
tial
dwel
lings
, so
is le
ss li
kely
to
be
rele
vant
in a
bus
ines
s co
ntex
t.
Stam
p d
uty
land
tax
is p
ayab
le w
hen
a le
ase
is g
rant
ed o
n bo
th t
he
pre
miu
m a
nd t
he n
et p
rese
nt v
alue
of
ren
t p
ayab
le t
o th
e la
ndlo
rd.
As
usua
l, in
tere
st a
nd p
enal
ties
app
ly
if th
e ta
x is
pai
d la
te.
In p
ract
ice
muc
h of
the
wor
k in
volv
ing
this
are
a w
ill b
e un
dert
aken
w
ith t
he a
ssis
tanc
e of
a s
pec
ialis
t.
The
who
le o
f thi
s ch
apte
r is
new
te
chni
cal k
now
ledg
e.
Mak
e su
re y
ou u
nder
stan
d w
hen
SD/S
DRT
and
SD
LT a
pply
. The
rul
es
for
grou
p r
elie
f are
ver
y ex
amin
able
an
d ar
e hi
ghly
like
ly t
o be
tes
ted
in
any
grou
ps
que
stio
n. N
ote
that
gr
oup
relie
f is
with
draw
n in
cer
tain
ci
rcum
stan
ces.
Qui
ckly
rev
iew
sec
tion
four
whi
ch
sim
ply
high
light
s th
e SD
and
SD
LT
imp
licat
ions
of i
ncor
por
atio
n an
d liq
uida
tion.
Fina
lly c
ompl
ete
the
self-
test
q
uest
ions
at
the
end
of t
he c
hap
ter.
Both
sta
mp
duty
/sta
mp
duty
re
serv
e ta
x an
d st
amp
dut
y la
nd t
ax a
re li
kely
to
be
rele
vant
in a
ny c
orp
orat
e tr
ansf
orm
atio
n. T
he im
pac
t of
st
amp
dut
y la
nd t
ax o
n in
corp
orat
ion
can
be
sign
ifica
nt. S
tam
p d
uty
land
ta
x al
so in
tera
cts
with
the
ca
lcul
atio
n of
VA
T du
e.
Esse
nti
al
po
ints
SD
SDRT
SDLT
Gro
up r
elie
f and
with
draw
al o
f gr
oup
rel
ief
Taxa
tio
n
16
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
D
ate
10
Whe
n an
indi
vidu
al o
r co
mpa
ny s
ells
an
inte
rest
in a
leas
e, t
here
will
alm
ost
alw
ays
be a
dis
pos
al g
ivin
g ris
e to
a
pos
sibl
e ca
pita
l gai
n.
It is
ver
y im
port
ant
to r
ever
t to
‘tax
sp
eak’
rat
her
than
just
nor
mal
Eng
lish
to w
ork
out
exac
tly w
hat
has
hap
pen
ed w
hen
deal
ing
with
leas
es.
Has
a n
ew le
ase
been
gra
nted
, or
has
an e
xist
ing
inte
rest
in t
he p
rope
rty
been
sol
d (a
ssig
ned)
in it
s en
tiret
y?
Hop
eful
ly t
he s
elle
r w
ill h
ave
take
n ad
vice
abo
ut t
his
in a
dvan
ce b
ecau
se
the
tax
char
ge w
ill b
e ca
lcul
ated
ver
y di
ffere
ntly
.
Sto
p a
nd
th
ink
Has
the
ven
dor
of a
leas
e re
tain
ed a
n in
tere
st in
the
pro
pert
y or
sol
d it
in it
s en
tiret
y?
Has
a d
isp
osal
occ
urre
d on
a t
akeo
ver
or h
as o
ne in
tere
st s
imp
ly b
een
swap
ped
for
anot
her?
Take
over
s an
d re
cons
truc
tions
, m
erge
rs a
nd a
cqui
sitio
ns, w
ill u
sual
ly
have
tax
sp
ecia
lists
as
key
mem
bers
of
the
adv
isin
g p
rofe
ssio
nal t
eam
. Yo
u w
ill n
eed
to k
eep
in m
ind
the
basi
c p
rinci
ple
s of
the
cal
cula
tions
for
shar
e an
d as
set
disp
osal
s w
hils
t al
so
brin
ging
in s
ome
spec
ial r
ules
in
situ
atio
ns w
here
the
pro
ceed
s ar
e co
ntin
gent
on
futu
re e
vent
s, s
uch
as
the
busi
ness
con
tinui
ng t
o be
p
rofit
able
.
Entr
epre
neur
s’ r
elie
f is
imp
orta
nt s
o yo
u sh
ould
stu
dy s
ectio
n on
e ca
refu
lly.
Nex
t w
ork
thro
ugh
the
sect
ion
on
leas
es in
rel
atio
n to
pro
pert
y. T
his
is
part
icul
arly
long
and
has
num
erou
s ex
ampl
es t
o he
lp y
ou le
arn.
You
nee
d to
und
erst
and
wha
t is
hap
peni
ng in
an
y di
spos
al in
ord
er t
o be
abl
e to
un
ders
tand
why
it is
tre
ated
in a
p
artic
ular
way
eg
that
an
assi
gnm
ent
is a
lway
s a
com
ple
te d
isp
osal
whe
reas
a
gran
t is
alw
ays
a pa
rt d
isp
osal
as
the
vend
or r
etai
ns s
ome
inte
rest
in
the
prop
erty
; or
that
a s
hort
leas
e is
tr
eate
d as
a w
astin
g as
set
and
mus
t th
eref
ore
use
an a
djus
ted
cost
.
Prep
arat
ion
of a
min
d-m
ap w
ill
pro
babl
y be
par
ticul
arly
use
ful f
or
leas
es.
Revi
ew s
ectio
n th
ree
qui
ckly
and
at
tem
pt
inte
ract
ive
que
stio
n tw
o.
Sect
ion
four
det
ails
the
tec
hnic
al
know
ledg
e w
hich
is e
ssen
tial t
o ch
apte
r si
xtee
n an
d is
hig
hly
exam
inab
le a
t th
is le
vel.
Fina
lly, c
ompl
ete
the
self-
test
q
uest
ions
at
the
end
of t
he c
hap
ter.
Mos
t of
thi
s ch
apte
r w
ill b
e of
cr
itica
l im
por
tanc
e in
any
q
uest
ion
on c
orp
orat
e tr
ansf
orm
atio
ns.
Esse
nti
al
po
ints
Entr
epre
neur
s’ r
elie
f –
avai
labi
lity
and
cond
ition
s
Leas
es –
pre
pare
a m
ind-
map
if
nece
ssar
y
Com
ple
te s
elf-
test
que
stio
n 8
to il
lust
rate
how
diff
eren
t to
pic
s st
udie
d so
far
can
inte
ract
to
form
an
exam
st
anda
rd q
uest
ion
invo
lvin
g sa
le a
nd le
aseb
ack
of p
rop
erty
Div
iden
d st
ripp
ing
Earn
-out
s
Shar
e fo
r sh
are
rule
s
Def
initi
on o
f a Q
CB
Inte
ract
ion
of S
SE w
ith t
he
shar
e fo
r sh
are
rule
s fo
r a
corp
orat
e sh
areh
olde
r
Stud
y gu
ide
17
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
D
ate
11
How
to
use
loss
es a
nd b
asic
tax
ca
lcul
atio
ns fo
r in
com
e ta
x an
d na
tiona
l ins
uran
ce a
re k
ey a
reas
of
grea
t pr
actic
al s
igni
fican
ce fo
r pe
rson
al
tax
wor
k.
Even
if y
ou d
o no
t ch
oose
to
spec
ialis
e in
tax
, it
will
hel
p yo
u to
giv
e ro
unde
d pr
ofes
sion
al a
dvic
e in
oth
er a
reas
if y
ou
can
unde
rsta
nd y
our
clie
nt’s
per
sona
l ta
x po
sitio
n.
Sto
p a
nd
th
ink
Is t
he o
vera
ll ta
xatio
n of
a s
ole
trad
er
less
tha
n an
em
plo
yee?
How
imp
orta
nt a
re n
atio
nal i
nsur
ance
co
ntrib
utio
ns?
Giv
en t
he le
ngth
of t
he
Com
preh
ensi
ve T
ax C
alcu
latio
n G
uide
pub
lishe
d by
HM
RC, i
t is
ha
rdly
sur
pris
ing
then
tha
t m
ost
acco
unta
nts
use
som
e fo
rm o
f so
ftw
are
to c
alcu
late
the
ir cl
ient
s’ t
ax
liabi
litie
s. H
owev
er, t
he u
nder
lyin
g p
rinci
ple
s of
the
cal
cula
tions
are
an
esse
ntia
l too
l in
your
kno
wle
dge
bank
.
The
sam
e ap
plie
s to
usi
ng lo
sses
from
tr
adin
g ac
tiviti
es. T
he o
ptio
ns
avai
labl
e ar
e lim
ited
and
you
shou
ld
be a
ble
to li
st t
hem
, but
mor
e im
port
ant
is t
he w
ay in
whi
ch t
hey
are
tailo
red
to e
ach
clie
nt’s
ci
rcum
stan
ces.
Thi
s is
whe
re a
n ac
coun
tant
add
s si
gnifi
cant
val
ue.
Cha
pter
ele
ven
mov
es o
n to
per
sona
l ta
x. T
his
chap
ter
shou
ld b
e p
ure
revi
sion
of P
rofe
ssio
nal S
tage
top
ics.
Re
ad t
hrou
gh t
he c
hap
ter
qui
ckly
an
d at
tem
pt a
ll th
e w
orke
d ex
amp
les
and
inte
ract
ive
que
stio
ns.
Not
e ho
w t
he a
dditi
onal
rat
e ta
xpay
er h
as a
n im
pact
on
exte
nsio
n of
the
bas
ic r
ate
band
for
per
sona
l p
ensi
on c
ontr
ibut
ions
and
Gift
Aid
do
natio
ns. T
here
are
tw
o to
p r
ates
of
tax:
50%
on
non-
savi
ngs
and
savi
ngs
inco
me
and
42.5
% o
n di
vide
nds.
Th
is g
ives
an
effe
ctiv
e di
vide
nd r
ate
for
an a
dditi
onal
rat
e ta
xpay
er o
f 36
.1%
com
par
ed t
o 25
% fo
r a
high
er
rate
tax
pay
er.
Use
of t
radi
ng lo
sses
will
inte
ract
with
ch
apte
rs fo
urte
en a
nd fi
ftee
n. N
IC is
pa
rtic
ular
ly im
port
ant
whe
n co
nsid
erin
g ho
w t
o ex
trac
t pr
ofits
fr
om a
com
pan
y (s
ee c
hap
ter
14).
At
this
leve
l, th
e in
tera
ctio
n of
IHT
and
CG
T is
par
ticul
arly
imp
orta
nt.
Att
empt
the
sel
f-te
st q
uest
ions
at
the
end
of t
he c
hap
ter.
The
extr
actio
n of
wea
lth fr
om
a bu
sine
ss h
as c
onsi
dera
ble
influ
ence
on
the
choi
ce o
f bu
sine
ss s
truc
ture
(ch
apte
r 14
). T
he u
se o
f tra
ding
loss
es
may
als
o be
imp
orta
nt in
the
tr
ansf
orm
atio
n of
an
unin
corp
orat
ed b
usin
ess
(cha
pte
r 15
).
Esse
nti
al
po
ints
Inco
me
tax
com
put
atio
n
Loss
rel
ief
NIC
IHT
Inte
ract
ion
of IH
T an
d C
GT
Taxa
tio
n
18
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
D
ate
12
Empl
oyer
s re
cogn
ise
that
one
of t
he
larg
est
cost
s of
run
ning
a b
usin
ess
will
be
the
cos
t of
the
pay
roll,
so
it is
im
port
ant
to g
et it
rig
ht.
The
way
a r
emun
erat
ion
pac
kage
is
stru
ctur
ed a
ffect
s ne
t p
ay.
Whi
lst
we
have
som
e ba
sic
rule
s w
hich
id
entif
y w
hat
is t
axab
le a
nd w
hen,
the
go
vern
men
t al
so u
ses
the
tax
syst
em t
o in
fluen
ce w
hat
empl
oym
ent
bene
fits
peo
ple
pre
fer.
For
exa
mp
le, d
amag
e ca
used
by
CO
2 em
issi
ons
is a
maj
or
conc
ern
and
ther
efor
e ta
x le
gisl
atio
n is
ai
med
at
enco
urag
ing
use
of le
ss
pol
lutin
g ca
rs.
Rem
uner
atio
n pa
ckag
es o
ften
invo
lve
shar
e sc
hem
es a
nd p
ensi
ons
sinc
e th
ese
are
tax
effic
ient
. The
gov
ernm
ent
enco
urag
es e
mp
loye
e sh
are
owne
rshi
p
beca
use
it be
nefit
s th
e ec
onom
y an
d th
e pe
nsio
n cr
isis
mak
es it
vita
l tha
t em
plo
yees
are
enc
oura
ged
to s
ave
for
thei
r re
tirem
ent.
Sto
p a
nd
th
ink
Why
do
high
er r
ate
taxp
ayer
s re
ceiv
e m
ore
tax
relie
f for
pen
sion
sav
ings
tha
n ba
sic
rate
tax
pay
ers?
Why
don
’t
emp
loye
es p
ay N
IC o
n ta
xabl
e be
nefit
s?
Whi
lst
ther
e ar
e so
me
basi
c ru
les
for
wha
t is
tax
able
, a p
erso
n’s
take
hom
e p
ay c
an b
e al
tere
d dr
amat
ical
ly b
y th
e m
ake
up a
nd t
imin
g of
his
re
mun
erat
ion.
An
acco
unta
nt w
ill b
e ex
pect
ed t
o un
ders
tand
how
an
indi
vidu
al’s
em
plo
ymen
t in
com
e w
ill b
e ta
xed
and
give
adv
ice
on h
ow t
his
coul
d be
m
inim
ised
. The
rul
es in
thi
s ar
ea
chan
ge c
onst
antly
and
whe
n gi
ving
ad
vice
, it
is im
port
ant
to k
eep
the
pos
ition
und
er c
onst
ant
revi
ew.
Und
erst
andi
ng y
our
clie
nt m
eans
lo
okin
g be
yond
his
bus
ines
s ne
eds
and
it w
ill b
e co
mm
on t
o ad
vise
not
on
ly a
com
pan
y, b
ut a
lso
to p
rep
are
tax
retu
rns
and
give
adv
ice
to t
he
dire
ctor
s on
the
ir p
erso
nal t
ax a
s w
ell.
Read
thr
ough
sec
tion
one
of c
hapt
er
twel
ve q
uick
ly a
s it
mer
ely
revi
ses
Prof
essi
onal
Sta
ge.
Ensu
re y
ou u
nder
stan
d ho
w s
hare
sc
hem
es a
re t
axed
acc
ordi
ng t
o th
e ta
ble
in s
ectio
n 2.
1.2
and
that
you
ar
e fa
mili
ar w
ith t
he r
ules
in t
he t
able
in
sec
tion
2.2.
4. T
his
coul
d be
tes
ted
in a
n ex
trac
tion
of w
ealth
from
a
com
pan
y q
uest
ion
or a
cor
pora
te
reor
gani
satio
n qu
estio
n.
Read
thr
ough
sec
tion
thre
e as
aga
in
it is
mos
tly r
evis
ion
of P
rofe
ssio
nal
Stag
e bu
t al
so n
ote
the
FA 2
011
rule
s w
hich
red
uce
the
annu
al a
llow
ance
an
d in
trod
uced
a t
hree
yea
r ca
rry
forw
ard
of u
nuse
d an
nual
allo
wan
ce.
Revi
ew y
our
know
ledg
e by
at
tem
ptin
g in
tera
ctiv
e qu
estio
n th
ree.
Rem
embe
r to
att
empt
the
sel
f-te
st
que
stio
ns a
t th
e en
d of
the
cha
pte
r.
Taxa
ble
bene
fits
inte
ract
with
na
tiona
l ins
uran
ce
cont
ribut
ions
(ch
apte
r 11
) an
d ex
trac
tion
of w
ealth
from
a
com
pan
y (c
hap
ter
14).
Sha
re
sche
mes
and
pen
sion
sch
emes
m
ay a
lso
be im
por
tant
in a
co
rpor
ate
tran
sfor
mat
ion
que
stio
n.
Esse
nti
al
po
ints
Ap
pro
ved
and
unap
prov
ed
shar
e sc
hem
es
CSO
P, E
MI,
SAYE
, SIP
su
mm
ary
tabl
e
Pens
ion
rule
s
SIPP
/ S
SAS
Stud
y gu
ide
19
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
D
ate
13
The
resi
denc
e, o
rdin
ary
resi
denc
e an
d do
mic
ile s
tatu
s of
an
indi
vidu
al
dete
rmin
e w
hich
sou
rces
and
how
m
uch
of t
he p
erso
n’s
wor
ldw
ide
inco
me/
gain
s ar
e ch
arge
able
to
UK
tax.
The
tax
adva
ntag
e of
bei
ng n
on-U
K do
mic
iled
has
been
sub
ject
to
polit
ical
sc
rutin
y in
rec
ent
year
s as
man
y w
ealth
y in
divi
dual
s ha
ve m
oved
to
the
UK.
The
ove
rsea
s ea
rnin
gs o
f the
se
peo
ple
are
not
gen
eral
ly t
axab
le in
the
U
K. T
here
are
cle
ar e
cono
mic
ar
gum
ents
for
wis
hing
to
reta
in t
heir
busi
ness
es h
ere
but
rece
nt r
ules
hav
e le
ad t
o w
ell-p
ublic
ised
deb
ate
abou
t th
e ta
x tr
eatm
ent
of t
hese
indi
vidu
als.
Mea
nwhi
le, t
here
are
als
o ru
les
whi
ch
allo
w c
erta
in e
arni
ngs
of U
K re
side
nt
emp
loye
es w
ho a
re b
ased
abr
oad
for
long
per
iods
, to
be t
reat
ed m
ore
favo
urab
ly fo
r ta
x p
urp
oses
.
Resi
denc
e an
d do
mic
ile a
lso
imp
act
on
an in
divi
dual
's lia
bilit
y to
cap
ital g
ains
ta
x an
d in
herit
ance
tax
.
Sto
p a
nd
th
ink
Why
sho
uld
resi
denc
e, o
rdin
ary
resi
denc
e an
d do
mic
ile a
ffect
the
am
ount
of U
K ta
xatio
n p
aid?
Why
isn’
t le
avin
g th
e U
K pe
rman
ently
suf
ficie
nt
to im
med
iate
ly e
nd a
per
son’
s lia
bilit
y to
UK
inhe
ritan
ce t
ax?
This
is a
noth
er a
rea
whe
re g
ivin
g ta
x ad
vice
to
a co
mp
any
may
als
o af
fect
th
e ta
x ad
vice
giv
en t
o its
key
sh
areh
olde
rs a
nd e
mp
loye
es. I
t is
m
ore
impo
rtan
t th
an e
ver
to h
ave
all
the
fact
s av
aila
ble
befo
re s
ettin
g ou
t th
e op
tions
for
the
clie
nt.
Beca
use
dom
icile
will
hav
e an
imp
act
on e
stat
e p
lann
ing
for
inhe
ritan
ce
tax,
you
will
oft
en b
e p
lann
ing
for
the
long
ter
m a
nd a
reg
ular
rev
iew
of
the
clie
nt’s
affa
irs is
nee
ded.
Rece
nt c
ase
law
and
cha
nges
to
HM
RC g
uida
nce
has
cast
dou
bt o
n w
hat
had
been
long
und
erst
ood
to
be t
he p
ositi
on in
thi
s ar
ea. A
new
st
atut
ory
defin
ition
of r
esid
ence
(w
hich
was
orig
inal
ly e
xpec
ted
to
appl
y fr
om A
pril
2012
) is
now
ex
pect
ed t
o ap
ply
from
6 A
pril
2013
. In
the
mea
ntim
e, c
lient
s w
ho a
re
base
d ab
road
but
who
tra
vel b
ack
to
the
UK
regu
larly
are
adv
ised
to
keep
ca
refu
l not
e of
whe
re t
heir
time
is
spen
t.
Ensu
re y
ou u
nder
stan
d th
e de
finiti
ons
of r
esid
ence
, ord
inar
y re
side
nce
and
dom
icile
. Tes
t yo
ur u
nder
stan
ding
of
the
impl
icat
ions
of a
rriv
ing
in t
he U
K or
leav
ing
the
UK
by a
ttem
ptin
g in
tera
ctiv
e qu
estio
n on
e. E
SC A
11 is
pa
rtic
ular
ly im
port
ant
in p
rovi
ding
re
lief f
or in
divi
dual
s se
nt o
vers
eas
to
wor
k.
Sect
ion
two
is a
lso
imp
orta
nt. Y
ou
mus
t un
ders
tand
how
em
ploy
men
t in
com
e an
d ot
her
inco
me
will
be
taxe
d fo
r di
ffere
nt in
divi
dual
s.
Com
plet
e th
e w
orke
d ex
ampl
e on
th
e re
mitt
ance
bas
is. Y
ou m
ust
be
able
to
calc
ulat
e D
TR fo
r an
in
divi
dual
with
mor
e th
an o
ne s
ourc
e of
inco
me.
Wor
k th
roug
h th
e w
orke
d ex
amp
le a
nd in
tera
ctiv
e q
uest
ion
at
the
end
of s
ectio
n tw
o.
Qui
ckly
rev
iew
sec
tion
thre
e on
CG
T.
You
mus
t kn
ow w
ho is
liab
le t
o U
K C
GT
and
who
is e
xem
pt s
o se
ctio
n 3.
2 is
par
ticul
arly
imp
orta
nt.
Qui
ckly
rev
iew
sec
tion
four
on
IHT.
Yo
u m
ust
know
who
is li
able
to
UK
IHT
and
who
is e
xem
pt,
ens
ure
you
unde
rsta
nd t
he e
xten
ded
defin
ition
of
dom
icile
for
IHT
purp
oses
. Lea
rn
the
loca
tion
of a
sset
rul
es.
Rem
embe
r to
att
empt
the
sel
f-te
st
que
stio
ns a
t th
e en
d of
the
cha
pte
r.
Pers
onal
res
iden
ce, o
rdin
ary
resi
denc
e an
d do
mic
ile s
tatu
s ca
rry
sign
ifica
nt t
ax p
lann
ing
oppo
rtun
ities
for
high
net
w
orth
indi
vidu
als.
For
ex
amp
le, a
per
son
who
has
si
gnifi
cant
gai
ns o
n th
e di
spos
al o
f a b
usin
ess
may
ch
oose
to
emig
rate
prio
r to
di
spos
al t
o m
inim
ise
the
UK
tax
pai
d.
Esse
nti
al
po
ints
Def
initi
on o
f res
iden
ce,
ordi
nary
res
iden
ce, a
nd
dom
icile
Impl
icat
ions
of a
rriv
ing
in o
r de
par
ting
from
the
UK
ESC
A11
Aris
ing
or
rem
ittan
ce b
asis
for
inco
me
tax
Rem
ittan
ce b
asis
use
rs
Inco
me
tax
DTR
with
mul
tiple
so
urce
s of
fore
ign
inco
me
Liab
ility
to
UK
CG
T
Liab
ility
to
UK
IHT
Dee
med
dom
icile
for
IHT
IHT
loca
tion
of a
sset
s ru
les
Taxa
tio
n
20
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
D
ate
14
It is
ver
y im
por
tant
tha
t a
busi
ness
ch
oose
s th
e m
ost
suita
ble
form
for
its
own
com
mer
cial
nee
ds w
ithou
t be
ing
driv
en b
y th
e ta
x co
nsid
erat
ions
. Tha
t sa
id, t
he o
ppor
tuni
ty t
o sa
ve t
ax h
as
led
to m
any
smal
ler
busi
ness
es in
pa
rtic
ular
, inc
orpo
ratin
g ju
st fo
r th
is
reas
on. T
he a
ccou
ntan
t’s
job
will
be
to
ensu
re t
hat
the
advi
ce g
iven
is b
oth
pra
ctic
al a
nd r
elev
ant.
The
gove
rnm
ent
has
enco
urag
ed
inco
rpor
atio
n th
roug
h th
e ta
x re
gim
e on
mor
e th
an o
ne o
ccas
ion.
A s
mal
l co
mp
any
can
pay
its
emp
loye
es w
ho
are
also
sha
reho
lder
s us
ing
divi
dend
s ra
ther
tha
n sa
larie
s an
d w
ill m
ake
a sa
ving
on
tax
and
natio
nal i
nsur
ance
. A
lso,
cer
tain
rel
iefs
are
onl
y av
aila
ble
to
com
pan
ies,
for
exam
ple
the
R&
D t
ax
cred
it.
Sto
p a
nd
th
ink
Is it
bet
ter
to t
rade
as
a co
mp
any
or a
n un
inco
rpor
ated
tra
der?
How
bes
t ca
n p
rofit
s be
ext
ract
ed fr
om a
com
pan
y?
Why
is t
here
suc
h a
need
for
anti-
avoi
danc
e le
gisl
atio
n fo
r se
rvic
e bu
sine
sses
whi
ch e
xplo
it di
ffere
nces
in
the
taxa
tion
of e
mp
loye
es a
nd t
he
pro
fits
of a
n ow
ner
man
aged
bus
ines
s?
The
choi
ce o
f tra
ding
med
ium
is o
ne
whe
re t
he a
ccou
ntan
t ca
n gi
ve
part
icul
arly
val
uabl
e ad
vice
. The
re is
an
op
por
tuni
ty h
ere
to s
ave
the
clie
nt
mon
ey v
ery
easi
ly, a
lthou
gh b
e w
arne
d, b
ecau
se t
here
are
als
o tr
aps.
One
suc
h p
robl
em a
rea
is t
he u
se o
f in
term
edia
ry c
ompa
nies
by
serv
ice
busi
ness
es w
hich
are
try
ing
to a
void
p
ayin
g em
plo
yee
leve
ls o
f tax
and
na
tiona
l ins
uran
ce. S
omet
imes
the
cl
ient
com
pany
will
onl
y us
e a
wor
ker
if he
has
set
him
self
up w
ithin
a
com
pany
. Thi
s is
par
ticul
arly
co
mm
on in
the
info
rmat
ion
tech
nolo
gy b
usin
ess.
Ther
e ar
e sp
ecia
l rul
es w
hich
may
ap
ply
her
e. U
nfor
tuna
tely
, muc
h of
th
e de
tail
on t
his
area
has
bee
n le
ft t
o H
MRC
gui
danc
e ra
ther
tha
n le
gisl
atio
n. T
his
mak
es it
far
mor
e di
fficu
lt fo
r th
e ad
vise
r to
be
cert
ain
of h
is a
dvic
e an
d w
ill in
evita
bly
lead
to
mor
e ca
se la
w in
futu
re.
Read
thr
ough
sec
tion
one
of c
hapt
er
four
teen
and
ens
ure
you
unde
rsta
nd
the
imp
licat
ions
of t
radi
ng a
s a
com
pan
y or
an
unin
corp
orat
ed
busi
ness
and
how
to
extr
act
pro
fits
from
a c
omp
any.
Read
thr
ough
sec
tion
two.
Ens
ure
you
coul
d re
cogn
ise
whe
n to
ap
ply
p
erso
nal s
ervi
ce c
omp
any
(PSC
) ru
les
and
that
you
cou
ld c
alcu
late
the
de
emed
em
plo
ymen
t in
com
e pa
ymen
t.
Revi
ew t
he d
iffer
ence
bet
wee
n a
PSC
an
d a
Man
aged
Ser
vice
Com
pan
y (M
SC)
and
the
imp
licat
ions
of b
eing
a
MSC
.
Qui
ckly
rev
iew
the
diff
eren
t av
aila
ble
corp
orat
e st
ruct
ures
.
Rem
embe
r to
att
empt
the
sel
f-te
st
que
stio
ns a
t th
e en
d of
the
cha
pte
r.
The
use
of in
term
edia
ries
cont
inue
s to
be
topi
cal w
ith
the
intr
oduc
tion
of M
anag
ed
Serv
ice
Com
pan
y le
gisl
atio
n. It
in
tera
cts
with
em
ploy
men
t in
com
e in
cha
pte
r 12
and
the
ch
oice
of b
usin
ess
stru
ctur
e an
d ex
trac
tion
of w
ealth
.
Esse
nti
al
po
ints
Com
pany
ver
sus
unin
corp
orat
ed b
usin
ess
Extr
actin
g p
rofit
s fr
om a
co
mpa
ny
PSC
& IR
35
MSC
Cor
por
ate
stru
ctur
es
Stud
y gu
ide
21
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
D
ate
15
His
toric
ally
, the
tre
nd h
as b
een
to
enco
urag
e bu
sine
sses
to
inco
rpor
ate.
Th
is is
bec
ause
a c
omp
any
is a
mor
e vi
sibl
e un
it ec
onom
ical
ly o
n w
hich
it is
m
uch
easi
er t
o fo
cus
relie
fs o
r ta
x ch
arge
s.
Nor
mal
ly la
rger
bus
ines
ses
are
mor
e pe
rman
ent.
The
pra
ctic
al s
igni
fican
ce
of in
corp
orat
ion
relie
fs a
re im
por
tant
fo
r th
e co
ntin
uity
of a
bus
ines
s.
Unf
ortu
nate
ly, t
here
is s
till v
irtua
lly n
o ta
x re
lief f
or d
isin
corp
orat
ion.
In fa
ct,
this
is n
ot e
ven
a re
cogn
ised
tax
ter
m
in t
ax le
gisl
atio
n. N
ever
thel
ess,
the
co
nseq
uenc
es o
f cea
sing
to
oper
ate
thro
ugh
a co
mpa
ny c
an b
e si
gnifi
cant
.
Sto
p a
nd
th
ink
Why
is t
he g
over
nmen
t so
kee
n to
p
rom
ote
inco
rpor
atio
n? W
hy a
re
busi
ness
tax
rel
iefs
not
ava
ilabl
e to
un
inco
rpor
ated
bus
ines
ses?
Is t
he a
mou
nt o
f tax
sav
ed b
y in
corp
orat
ion
suffi
cien
t to
offs
et t
he
incr
ease
d ad
min
istr
ativ
e bu
rden
? W
hen
is it
ben
efic
ial t
o in
corp
orat
e? W
hen
is
it be
nefic
ial t
o di
sinc
orp
orat
e? W
hat
impa
ct w
ill g
ift r
elie
f and
inco
rpor
atio
n re
lief h
ave
on fu
ture
gai
ns a
nd a
ny
futu
re d
ecis
ion
to d
isin
corp
orat
e?
Muc
h w
ill d
epen
d on
the
siz
e an
d fu
ture
pro
spec
ts o
f the
bus
ines
s. T
he
stan
dard
list
of r
elie
fs fo
r in
corp
orat
ion
will
qui
ckly
bec
ome
fam
iliar
to
the
prof
essi
onal
wor
king
in
this
are
a, a
s w
ill t
he la
ck o
f the
m fo
r di
sinc
orp
orat
ion.
Oft
en o
ne o
f the
mor
e im
port
ant
deci
sion
s w
ill b
e ab
out
prop
erty
; w
heth
er t
hat
shou
ld b
e ow
ned
dire
ctly
by
an in
divi
dual
or
held
w
ithin
a c
ompa
ny, p
artic
ular
ly
bear
ing
in m
ind
that
the
rul
es fo
r ca
lcul
atin
g ca
pita
l gai
ns a
re v
ery
diffe
rent
for
com
pani
es a
nd t
hat
the
tax
rate
s w
ill a
lso
be d
iffer
ent.
How
ever
, rem
embe
r th
at t
here
is a
co
mm
erci
al s
ide
to t
he d
ecis
ion
and
the
trad
er m
ay d
ecid
e th
at a
bus
ines
s ne
eds
the
pro
tect
ion
of li
mite
d lia
bilit
y.
Cha
pte
r fif
teen
is t
he fi
rst
of t
he
scen
ario
bas
ed c
hap
ters
. The
re is
no
new
tec
hnic
al k
now
ledg
e, it
rev
iew
s yo
ur k
now
ledg
e fr
om e
arlie
r ch
apte
rs
and
Prof
essi
onal
Sta
ge k
now
ledg
e.
Read
thr
ough
sec
tion
one
quic
kly
as
it is
pur
e re
visi
on o
f Pro
fess
iona
l St
age.
Ens
ure
you
unde
rsta
nd h
ow
gift
rel
ief a
nd in
corp
orat
ion
relie
f w
ork.
Sect
ion
two
cons
ider
s th
e im
plic
atio
ns o
f ‘di
sinc
orp
orat
ion’
, si
mp
ly a
sol
vent
liq
uida
tion
(see
ch
apte
r 7)
and
a r
ever
sion
to
unin
corp
orat
ed s
tatu
s.
Sect
ion
thre
e re
view
s th
e im
plic
atio
ns
of b
ankr
uptc
y an
d in
tera
cts
with
the
us
e of
tra
ding
loss
es (
see
chap
ter
11).
Rem
embe
r to
att
empt
the
sel
f-te
st
que
stio
ns a
t th
e en
d of
the
cha
pte
r.
Inco
rpor
atio
n ha
s po
tent
ial
inte
ract
ion
with
sta
mp
duty
la
nd t
ax, V
AT
and
char
geab
le
gain
s. D
isin
corp
orat
ion
inte
ract
s w
ith t
he s
ame
taxe
s bu
t le
ss fa
vour
ably
.
Esse
nti
al
po
ints
Inco
rpor
atio
n
Dis
app
lyin
g in
corp
orat
ion
relie
f
Gift
rel
ief v
inco
rpor
atio
n re
lief
Entr
epre
neur
s’ r
elie
f
‘Dis
inco
rpor
atio
n’
Bank
rup
tcy
and
TLR
Taxa
tio
n
22
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
D
ate
16
The
tax
imp
licat
ions
of a
cor
por
ate
reor
gani
satio
n us
ually
pla
y a
sign
ifica
nt
role
in t
he d
ecis
ion
mak
ing
proc
ess.
Som
etim
es a
gro
up’s
tot
al t
ax b
ill c
an
be r
educ
ed b
y re
stru
ctur
ing,
but
us
ually
a r
eorg
anis
atio
n is
trig
gere
d fo
r bu
sine
ss r
easo
ns.
A c
omp
any
whi
ch o
per
ates
und
er a
si
ngle
cor
pora
te u
mbr
ella
thr
ough
se
par
ate
divi
sion
s w
ill h
ave
a si
ngle
tax
co
mp
utat
ion.
A g
roup
whi
ch u
ses
a se
par
ate
corp
orat
e ve
hicl
e fo
r ea
ch o
f its
bus
ines
s se
gmen
ts w
ill h
ave
a ta
x co
mpu
tatio
n fo
r ea
ch c
ompa
ny.
A b
usin
ess
may
be
sold
by
selli
ng t
he
com
pan
y’s
shar
es, o
r ju
st p
art
of t
he
trad
e an
d so
me
of t
he a
sset
s co
uld
be
sold
, eith
er a
s a
par
cel o
f ass
ets,
or
with
in a
new
cor
por
ate
wra
pp
er.
It is
imp
orta
nt t
o co
nsid
er t
he t
imin
g of
th
e sa
le: a
ll in
one
go;
or
pie
cem
eal
over
a lo
nger
per
iod.
Thi
s m
ay h
ave
an
effe
ct o
n th
e re
liefs
and
exe
mp
tions
av
aila
ble
and
it al
l nee
ds c
aref
ul
pla
nnin
g to
min
imis
e th
e ta
x p
ayab
le.
Sto
p a
nd
th
ink
Wha
t is
the
diff
eren
ce b
etw
een
a di
spos
al o
f sha
res
and
a di
spos
al o
f tr
ade
and
asse
ts?
Wha
t di
ffere
nce
does
it
mak
e if
the
vend
or is
a c
omp
any
or a
p
rivat
e in
divi
dual
?
Wha
teve
r th
e si
ze o
f the
clie
nt o
r de
al
you
are
wor
king
on,
rem
embe
r th
at
the
prin
cip
les
are
larg
ely
the
sam
e.
Look
out
for
hidd
en t
ax c
harg
es
whi
ch c
ryst
allis
e on
a c
omp
any
leav
ing
a gr
oup
follo
win
g ea
rlier
tr
ansf
ers
of a
sset
s. B
ewar
e al
so o
f the
po
ssib
le lo
ss o
f bro
ught
forw
ard
loss
es fo
llow
ing
a ch
ange
in
owne
rshi
p.
Mos
t im
por
tant
of a
ll, it
can
be
easy
to
bec
ome
carr
ied
away
with
tax
co
mpu
tatio
ns w
ithou
t co
nsid
erin
g th
e ve
ndor
/pur
chas
ers’
des
ired
obje
ctiv
es, s
o al
way
s ke
ep t
hese
in
min
d.
Cha
pter
six
teen
is a
long
cha
pte
r bu
t co
ntai
ns n
o ne
w t
echn
ical
kn
owle
dge.
Min
d-m
aps
mig
ht h
elp
you
to s
ee w
hat
is a
ctua
lly h
app
enin
g in
eac
h se
ctio
n ra
ther
tha
n si
mpl
y fo
cuss
ing
on t
he t
echn
ical
kn
owle
dge.
Read
thr
ough
sec
tion
two
on s
ale
of
shar
es. C
onsi
der
the
impl
icat
ions
for
a sa
le b
y an
indi
vidu
al o
r by
a
com
pany
. The
re a
re a
lso
impl
icat
ions
fo
r th
e co
mp
any
bein
g so
ld.
Read
thr
ough
sec
tion
thre
e on
the
sa
le o
f tra
de a
nd a
sset
s.
Sect
ions
four
and
five
are
link
ed. I
n se
ctio
n fo
ur e
nsur
e yo
u un
ders
tand
th
e im
plic
atio
ns o
f a t
rans
fer
of t
rade
an
d as
sets
with
in a
75%
gro
up fr
om
one
subs
idia
ry t
o an
othe
r (S
1 to
S 2).
Con
side
r th
e im
plic
atio
ns fr
om t
he
per
spec
tive
of a
ll th
e co
mp
anie
s. In
se
ctio
n fiv
e yo
u th
en n
eed
to
appr
ecia
te t
he im
plic
atio
ns o
f the
n se
lling
S2 o
utsi
de o
f the
gro
up.
Fina
lly, q
uick
ly r
evie
w m
anag
emen
t bu
y ou
ts (
MBO
).
Rem
embe
r to
att
empt
the
sel
f-te
st
que
stio
ns a
t th
e en
d of
the
cha
pte
r.
The
use
of lo
sses
; the
effe
ct o
n lo
ss r
elie
f gro
ups
and
char
geab
le g
ains
gro
ups;
and
th
e p
ossi
ble
app
licat
ion
of
stam
p ta
xes
and
VAT
all n
eed
to b
e co
nsid
ered
in a
co
rpor
ate
reor
gani
satio
n.
Succ
essi
ons
may
als
o be
im
por
tant
(ch
apte
r 4)
.
The
subs
tant
ial s
hare
hold
ing
exem
ptio
n (c
hapt
er 1
) m
ay
app
ly t
o a
sale
by
a co
rpor
ate
vend
or. S
hare
for
shar
e re
lief
may
ap
ply
to
the
reor
gani
satio
n of
sha
res
owne
d by
a p
rivat
e in
divi
dual
(c
hap
ter
10).
Esse
nti
al
po
ints
Sa
le o
f sha
res
Sale
of t
rade
and
ass
ets
Tran
sfer
s w
ithin
a 7
5% g
roup
Hiv
e do
wn
MBO
Stud
y gu
ide
23
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
D
ate
17
Belo
ngin
g to
a p
rofe
ssio
nal b
ody
requ
ires
adhe
renc
e to
a c
ode
of e
thic
s.
This
is p
art
of w
hat
diffe
rent
iate
s a
Cha
rter
ed A
ccou
ntan
t fr
om u
nqua
lifie
d ac
coun
tant
s. C
lient
s, m
embe
rs o
f the
pu
blic
, and
the
gov
ernm
ent
reco
gnis
e th
at w
e ar
e re
qui
red
to a
dher
e to
ex
actin
g st
anda
rds
and
so e
xpec
t a
cert
ain
stan
dard
of b
ehav
iour
from
us.
Mon
ey la
unde
ring
has
been
a m
ajor
p
robl
em in
the
pas
t an
d as
par
t of
the
la
ws
desi
gned
to
com
bat
this
, p
rofe
ssio
nals
are
req
uire
d to
par
ticip
ate
in it
s pr
even
tion
by r
epor
ting
cert
ain
activ
ities
whi
ch m
ay r
elat
e to
the
p
roce
eds
of c
rime.
In o
rder
to
tack
le t
he lo
ss o
f tax
re
venu
es t
hrou
gh t
ax a
void
ance
sc
hem
es, l
aws
have
bee
n in
trod
uced
re
qui
ring
disc
losu
re o
f cer
tain
sch
emes
to
HM
RC.
Sto
p a
nd
th
ink
Not
all
clie
nts
have
the
sam
e et
hica
l st
anda
rds
as y
ou h
ave.
You
sho
uld
alw
ays
ensu
re t
hat
you
ask
rele
vant
qu
estio
ns o
f clie
nts
to o
btai
n th
e fu
ll un
ders
tand
ing
of t
heir
busi
ness
.
Ethi
cal c
onsi
dera
tions
und
erp
in a
ll of
yo
ur s
tudi
es a
s w
ell a
s yo
ur w
ork
exp
erie
nce.
You
will
oft
en m
ake
ethi
cal d
ecis
ions
w
ithou
t ev
en r
ealis
ing
it, b
ut
som
etim
es y
ou m
ay fi
nd y
ours
elf i
n a
qua
ndar
y an
d be
uns
ure
how
to
act.
Th
is is
whe
n th
e C
ode
of E
thic
s w
ill
be o
f ass
ista
nce.
You
need
to
know
wha
t to
look
out
fo
r an
d ho
w t
o ac
t. Y
ou s
houl
d al
way
s ta
ke p
artic
ular
car
e in
rel
atio
n to
clie
nt c
onfid
entia
lity.
The
best
ap
pro
ach
is t
o re
ad t
he
chap
ter
in s
ever
al s
hort
sitt
ings
m
akin
g no
tes
on t
he e
ssen
tial p
oint
s as
you
go
alon
g.
Ethi
cs is
a fu
ndam
enta
l par
t of
you
r tr
aini
ng t
o be
com
e a
Cha
rter
ed
Acc
ount
ant
and
will
feat
ure
in t
he
asse
ssm
ent.
Ensu
re y
ou r
ead
Sect
ion
11 o
n an
swer
ing
ethi
cs e
xam
que
stio
ns
whi
ch u
ses
a re
al e
xam
que
stio
n to
de
mon
stra
te g
ood
tech
niqu
e in
thi
s ar
ea.
Fini
sh t
he c
hapt
er b
y at
tem
ptin
g th
e se
lf-te
st q
uest
ions
at
the
end
of t
he
chap
ter.
In y
our
pre
viou
s st
udie
s, y
ou
have
lear
nt a
bout
eth
ical
issu
es
in r
elat
ion
to t
ax w
ork.
Thi
s sp
ecifi
cally
incl
uded
ele
men
ts
of t
he IF
AC
Cod
e of
Eth
ics
for
Prof
essi
onal
Acc
ount
ants
and
th
e IC
AEW
Cod
e of
Eth
ics.
In t
his
chap
ter
we
revi
ew t
his
know
ledg
e an
d th
en e
xten
d it
by g
ivin
g gr
eate
r co
nsid
erat
ion
to p
ract
ical
sc
enar
ios.
Esse
nti
al
po
ints
The
five
fund
amen
tal
prin
cip
les
Thre
ats
Dis
clos
ure
of in
form
atio
n
Con
flict
s of
inte
rest
Prin
cip
les
of t
axat
ion
wor
k
HM
RC e
rror
s
Mon
ey la
unde
ring
Tax
evas
ion
v ta
x av
oida
nce
Ans
wer
ing
ethi
cs e
xam
qu
estio
ns
Taxa
tio
n
24
Study guide 25
4 Skills assessment guide
4.1 Introduction As a Chartered Accountant in the business world, you will require the knowledge and skills to interpret financial and other numerical and business data, and communicate the underlying issues to your clients. In a similar way to the required knowledge, the ACA syllabus has been designed to develop your professional skills in a progressive manner. These skills are broadly categorised as:
Assimilating and using information Structuring problems and solutions Applying judgement Drawing conclusions and making recommendations
4.2 Assessing your professional skills Set out below is a pictorial representation of the different mix of knowledge and skills that will be assessed in the examinations that comprise the ACA qualification.
The work experience requirements for students provide a framework to develop appropriate work experience, completion of which is essential in order to qualify for membership. Work experience is also an essential component for examination preparation.
The work experience framework is built around five key skills:
Business awareness – being aware of the internal and external issues and pressure for change facing an organisation and assessing an organisation’s performance.
Technical and functional expertise – applying syllabus learning outcomes and where appropriate, further technical knowledge to real situations.
Ethics and professionalism – recognising issues, using knowledge and experience to assess implications, making confident decisions and recommendations.
Professional judgement – making recommendations and adding value with appropriate, targeted and relevant solutions.
Personal effectiveness – developing, maintaining and exercising skills and personal attributes necessary for the role and responsibilities.
The examinations, and in particular the Advanced Stage, embrace all of these skills.
The link between work experience and the examinations is demonstrated by the skills development grids produced by the examiners.
This will help candidates see that their practical knowledge and skills gained in the workplace feed back into the exam room and vice-versa.
Taxation 26
4.3 Assessment grids The following pages set out the learning outcomes for Taxation that are addressed under each of the four skills areas. In addition, for each skills area, there is a description of:
The specific skills that are assessed How these skills are assessed
Using these grids will enable you to determine how the examination paper will be structured and to consider whether your knowledge of Taxation is sufficiently strong to enable you to apply it in the required manner.
Study guide 27
Taxation 28
5 Technical knowledge The tables contained in this section show the technical knowledge covered in the ACA taxation syllabus.
For each individual topic the level of knowledge required in the relevant Professional Stage module and the Advanced Stage content is shown.
The knowledge levels are defined as follows:
Level C
A general knowledge with a basic understanding of the subject matter and training in its application sufficient to identify significant issues and evaluate their potential implications or impact.
Level B
A working knowledge with a broad understanding of the subject matter and a level of experience in the application thereof sufficient to apply the subject matter in straightforward circumstances.
Level A
A thorough knowledge with a solid understanding of the subject matter and experience in the application thereof sufficient to exercise reasonable professional judgement in the application of the subject matter in those circumstances generally encountered by Chartered Accountants.
Key to other symbols:
→ the knowledge level reached is assumed to be continued
Study guide 29
Taxation
Title
Professional Stage
Ad
van
ced
Sta
ge
Prin
cip
les
of
Taxa
tio
n
Taxa
tio
n
Objectives of taxation C → →
Ethics A → →
HM Revenue & Customs B → →
Tax evasion and avoidance C B A
BUSINESS TAXATION
Administration B → →
Appeals C → →
Payments B A →
Penalties and interest B A →
Self assessment B A →
Chargeable gains
Chargeable assets C B →
Chargeable disposals C B →
Chargeable persons C B →
Chattels: wasting and non wasting B → →
Costs of acquisition and disposal C B →
Indexation B A →
Leases A
Nil gain/nil loss transfers A →
Part disposals B →
Pre 31 March 1982 assets A →
Qualifying corporate bonds A
Relief for capital losses A →
Reorganisations and reconstructions A
Shares and securities (including bonus and rights issues) A →
Chargeable gains reliefs
Entrepreneurs’ relief A →
Gift relief A →
Incorporation relief A →
Roll-over relief A →
Taxation 30
Title
Professional Stage
Ad
van
ced
Sta
ge
Prin
cip
les
of
Taxa
tio
n
Taxa
tio
n
Substantial shareholding exemption A →
Trading profits
Adjustments to profits B A →
Badges of trade B A →
Capital allowances B A →
Foreign currency transactions A
Long periods of account C A →
Pension contributions B A
Royalty payments B →
Royalty receipts B →
Unincorporated businesses
Basis of assessment – current year basis B A →
Change of accounting date B →
Commencement and cessation of trade B A →
Overlap profits and treatment of opening year losses B A →
Partnerships B A →
Trading losses A →
Companies – Taxable total profits
Property income (including lease premiums) A →
Trading profits B A →
Loan relationships B A →
Loan relationships – worldwide debt cap B
Intangible assets B A
Research and development expenditure B A
Research and development tax credits A
Miscellaneous income B A →
Chargeable gains B A →
Relief for capital losses A →
Indexation B A →
Qualifying donations B A →
Trading losses A →
Use of deficit on non-trading loan relationships A →
Study guide 31
Title
Professional Stage
Ad
van
ced
Sta
ge
Prin
cip
les
of
Taxa
tio
n
Taxa
tio
n
Corporation tax computation
Chargeable accounting periods C B A
Close companies A →
Corporation tax liability B A →
Distributions B →
Double tax relief (including underlying tax and withholding tax) B
Liquidation A
Provision of services through a company A
Rates of tax B A →
Residence C B →
Groups
Associated companies C B A
Capital gains groups A →
Changes in group structure A
Change in ownership B A
Consortium relief A
Controlled foreign companies A
Degrouping charges A
Group loss relief A →
Group relationships A →
Non-coterminous accounting periods A →
Overseas companies and branches A
Pre-acquisition gains and losses A
Roll-over relief A →
Transfer of assets A →
Transfer pricing A
Stamp Duty and Stamp Duty Land Tax
Basic principles B
Chargeable occasions B
Exemptions B
Taxation 32
Title
Professional Stage
Ad
van
ced
Sta
ge
Prin
cip
les
of
Taxa
tio
n
Taxa
tio
n
VAT
Administration B → →
Appeals C → →
Capital goods scheme A
Group aspects A →
Input VAT A → →
Output VAT A → →
Overseas aspects A →
Partial exemption B →
Payments A → →
Penalties and interest A → →
Property transactions A →
Registration and deregistration A → →
Small business reliefs A → →
Taxable person A → →
Taxable supplies A → →
Transfer of a business as a going concern B →
VAT records and accounts A → →
PERSONAL TAXATION
Administration
Administration B → →
Appeals C → →
PAYE B → →
Payments B A →
Penalties and interest B A →
Self assessment B A →
Employees
Allowable deductions against employment income A →
Employment income B A →
Share schemes A
Statutory Mileage Rates Scheme A →
Taxable and exempt benefits B A →
Termination payments B →
Study guide 33
Title
Professional Stage
Ad
van
ced
Sta
ge
Prin
cip
les
of
Taxa
tio
n
Taxa
tio
n
Other income
Dividends from UK companies B A →
Enterprise Investment Scheme B
Investment income B A →
ISAs B B →
Property income C A →
Lease premiums A →
Savings income B A →
Venture Capital Trusts B
Income tax computation
Exempt income B A →
Gift Aid B A →
Income tax charge on child benefit B →
Income tax liable and payable B A →
Independent taxation and jointly owned assets B A
Married couples allowance B A →
Pension contributions: provision for retirement B A
Pension contributions: tax reliefs B A
Personal age allowance B A →
Personal allowance B A →
Rates of tax B A →
Taxable persons C A →
Capital gains tax
Annual exempt amount B A →
Chargeable assets C B →
Chargeable disposals C B →
Chargeable persons C B →
Chattels: wasting and non wasting B → →
Connected persons A →
Converted trading losses B →
Costs of acquisition and disposal C B →
Leases A
Taxation 34
Title
Professional Stage
Ad
van
ced
Sta
ge
Prin
cip
les
of
Taxa
tio
n
Taxa
tio
n
Nil gain/nil loss transfers A →
Part disposals B →
Pre 31 March 1982 assets A →
Qualifying corporate bonds A
Rates of tax B A →
Relief for capital losses A →
Reorganisations and reconstructions A
Shares and securities (including bonus and rights issues) A →
Capital gains tax reliefs
Letting relief A →
Principal private residence relief A →
Reinvestment relief under EIS B
National insurance contributions
Administration C B →
Classes of NIC C B →
Directors B →
Maximum contributions C →
Taxable benefits B →
Basic principles of inheritance tax
Chargeable persons B →
Chargeable property B →
Excluded property B →
Inter-spouse transfers A →
Rate of tax A →
Related property B →
Seven year accumulation period A →
Inheritance tax on lifetime transfers
Discretionary trusts A →
Potentially exempt transfers A →
Inheritance tax on death
Death estate A →
Deeds of variation B →
Study guide 35
Title
Professional Stage
Ad
van
ced
Sta
ge
Prin
cip
les
of
Taxa
tio
n
Taxa
tio
n
Lifetime transfers A →
Reliefs and exemptions from inheritance tax
Agricultural property relief B →
Annual exemption B →
Business property relief A →
Gifts to charities and political parties A →
Gifts with reservation of benefit B →
Marriage exemption A →
Normal expenditure out of income A →
Quick succession relief B →
Small gifts exemption A →
Taper relief A →
Overseas aspects of personal taxation
Arising basis A
Deemed domicile for IHT A
Domicile A
Foreign assets, income and gains A
Double tax relief A
Ordinary residence A
Remittance basis A
Residence A
Temporary absence A
UK taxation of non-domiciled individuals A
Taxation 36
Ethics Codes and Standards Ethics Codes and Standards Level Professional Stage modules
IFAC Code of Ethics for Professional Accountants
(parts A, B and C and Definitions)
A Assurance
Business and Finance
Law
Principles of Taxation
Audit and Assurance
Business Strategy
Financial Reporting
Taxation
ICAEW Code of Ethics A
APB Ethical Standards 1-5 (revised)
Provisions Available to Small Entities (revised)
A Assurance
Audit and Assurance
6 Key resources STUDENT SUPPORT TEAM
T +44 (0)1908 248 250 E [email protected]
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ONLINE STUDENT COMMUNITY
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