(c) (i) Compute Gloria’s capital gains tax liability for 2006/07 ignoring any claims or elections available to
reduce the liability. (3 marks)
(c) Advise Alan on the proposed disposal of the shares in Mobile Ltd. Your answer should include calculationsof the potential capital gain, and explain any options available to Alan to reduce this tax liability. (7 marks)
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(c) Calculate the expected corporation tax liability of Dovedale Ltd for the year ending 31 March 2007 on theassumption that all available reliefs are claimed by Dovedale Ltd but that Hira Ltd will not claim any capitalallowances in that year. (4 marks)
(ii) Compute the annual income tax saving from your recommendation in (i) above as compared with thesituation where Cindy retains both the property and the shares. Identify any other tax implicationsarising from your recommendation. Your answer should consider all relevant taxes. (3 marks)
(b) Compute Gloria’s total income tax and national insurance liability for 2006/07. (7 marks)
(d) Explain how Gloria would be taxed in the UK on the dividends paid by Bubble Inc and the capital gains taxand inheritance tax implications of a future disposal of the shares. Clearly state, giving reasons, whether ornot the payment made to Eric is allowable for capital gains tax purposes. (9 marks)You should assume that the rates and allowances for the tax year 2005/06 apply throughout this question.
(b) (i) Compute the corporation tax liability of Speak Write Ltd for its first trading period on the assumptionthat the IR 35 legislation applies to all of its income. (2 marks)
(ii) Assuming the relief in (i) is available, advise Sharon on the maximum amount of cash she could receiveon incorporation, without triggering a capital gains tax (CGT) liability. (3 marks)
