Business Tax / 100% Correct Answers

When is a receipt not taxable - If the receipt is wholly unexpected and unsolicited What are the badges of trade? - Profit-seeking motive, frequency and number of similar transactions, modification of asset in order to make it more saleable, nature of the asset, connection with existing trade, financing arrangements, length of ownership, existence of a sales organisation, reason for the acquisition/sale Is amortisation an allowable expense? - No, amortisation is not an allowable expense When is a provision allowable? - When the entity has an obligation to make a payment at the reporting date as a result of a past event, it is probable that a transfer of economic benefits will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation When is an expense incurred for a dual purpose? - When there is both a business and private element to the expense What type of clothing expenditure is allowable - expenditure on protective clothing On the cessation of trade, how much redundancy payments can be made - 4 x the statutory redundancy amount (redundancy plus 3x this amount) What is the formula for calculating the element of a short lease premium which is chargeable as property income - P x (50-y) / 50 When are removal expenses not allowable for a business - When they move to a significantly larger premises, as this will be deemed to have an enduring benefit When a trader transfers stock to a connected U.K. trader, what election can be made - An election can be made, provided actual cost and sales consideration is lower than market value, for the higher of actual cost and sales consideration to be the transferred value of stock