(b) Using the information provided in the case scenario, strategically evaluate the performance of the company
up to 2004, indicating any areas of particular concern. (20 marks)
(b) How could pursuing a corporate environmental strategy both add to CFS’s competitive advantage and be
socially responsible? (5 marks)
(b) Explain how the non-payment of contributions and the change in the pension benefits should be treated in
the financial statements of Savage for the year ended 31 October 2005. (4 marks)
Matthew Black is well aware that the achievement of the growth targets for the 2005 to 2007 period will depend on
successful implementation of the strategy, affecting all parts of the company’s activities.
(c) Explain the key issues affecting implementation and the changes necessary to achieve Universal’s ambitious
growth strategy. (15 marks)
(d) What criteria would you use to assess whether Universal is an ‘excellent’ company? (5 marks)
3 The directors of Panel, a public limited company, are reviewing the procedures for the calculation of the deferred tax
provision for their company. They are quite surprised at the impact on the provision caused by changes in accounting
standards such as IFRS1 ‘First time adoption of International Financial Reporting Standards’ and IFRS2 ‘Share-based
Payment’. Panel is adopting International Financial Reporting Standards for the first time as at 31 October 2005 and
the directors are unsure how the deferred tax provision will be calculated in its financial statements ended on that
date including the opening provision at 1 November 2003.
Required:
(a) (i) Explain how changes in accounting standards are likely to have an impact on the provision for deferred
taxation under IAS12 ‘Income Taxes’. (5 marks)
(ii) Describe the basis for the calculation of the provision for deferred taxation on first time adoption of IFRS
including the provision in the opening IFRS balance sheet. (4 marks)
Assume that the rates and allowances for 2004/05 apply throughout this part.
(b) Explain the consequences of filing the VAT returns late and advise Fred how he should deal with the
underpayment and bad debt for VAT purposes. Your explanation should be supported by relevant
calculations. (10 marks)
(b) (i) Advise Alasdair of the tax implications and relative financial risks attached to the following property
investments:
(1) buy to let residential property;
(2) commercial property; and
(3) shares in a property investment company/unit trust. (9 marks)
(c) (i) Provide three examples of personal financial planning protection products that would be of use in
Henry’s situation. Justify your selections by reference to the type of protection provided. (6 marks)
4 Assume today’s date is 15 May 2005.
In March 1999, Bob was made redundant from his job as a furniture salesman. He decided to travel round the world,
and did so, returning to the UK in May 2001. Bob then decided to set up his own business selling furniture. He
started trading on 1 October 2001. After some initial success, the business made losses as Bob tried to win more
customers. However, he was eventually successful, and the business subsequently made profits.
The results for Bob’s business were as follows:
Period Schedule D Case I
Trading Profits/(losses)
￡
1 October 2001 – 30 April 2002 13,500
1 May 2002 – 30 April 2003 (18,000)
1 May 2003 – 30 April 2004 28,000
Bob required funds to help start his business, so he raised money in three ways:
(1) Bob is a keen cricket fan, and in the 1990s, he collected many books on cricket players. To raise money, Bob
started selling books from his collection. These had risen considerably in value and sold for between ￡150 and
￡300 per book. None of the books forms part of a set. Bob created an internet website to advertise the books.
Bob has not declared this income, as he believes that the proceeds from selling the books are non-taxable.
(2) He disposed of two paintings and an antique silver coffee set at auction on 1 December 2004, realising
chargeable gains totalling ￡23,720.
(3) Bob took a part time job in a furniture store on 1 January 2003. His annual salary has remained at ￡12,600
per year since he started this employment.
Bob has 5,000 shares in Willis Ltd, an unquoted trading company based in the UK. He subscribed for these shares
in August 2000, paying ￡3 per share. On 1 December 2004, Bob received a letter informing him that the company
had gone into receivership. As a result, his shares were almost worthless. The receivers dealing with the company
estimated that on the liquidation of the company, he would receive no more than 10p per share for his shareholding.
He has not yet received any money.
Required:
(a) Write a letter to Bob advising him on whether or not he is correct in believing that his book sales are nontaxable.
Your advice should include reference to the badges of trade and their application to this case.
(9 marks)