Candidate Number

Association
of Taxation
Technicians

Examination

May 2012

PAPER 1 - Part I
Personal Taxation

TIME ALLOWED – 3 ¼ HOURS

 You are required to answer all questions in Part I and all FOUR questions in Part II
(printed separately).

 The first 15 minutes is designated as reading time. During this time you may read your
question paper and legislation but you are not permitted to annotate your question
paper or write in the answer folder. The Presiding Officer will inform you when you can
start writing.

 You must write your answers in this booklet using the space provided under each
question and complete your candidate number at the top of this page.

 Each question carries between two and four marks as indicated in brackets.

 It is expected that your answers will be in brief bullet point format or summary
computations.

 It is not expected that you will require all of the space provided.

 All workings should be shown and made to the nearest month and pound unless the
question requires otherwise.
1. Ethel is 47 years old and in 2011/12 received the following income:

£
Income from self-employment 75,000
Interest from NS&I Easy Access Savings Account 30,000

Calculate Ethel’s taxable income for 2011/12. (3)

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2. Explain the maximum amounts that an individual may invest in Individual
Savings Accounts (ISAs) in 2011/12. (2)

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3. In October 2011 Peter received an insurance payment of £37,000 in respect of
jewellery bought in January 2004 for £6,000, which had been stolen in February 2011.
In December 2011 Peter spent £12,000 replacing the jewellery.

Calculate Peter’s chargeable gain, assuming that all possible reliefs are claimed.
(2)

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4. In 2011/12 David had a Capital Gains Tax liability of £60,000.

Calculate any interest that may be due assuming the tax is paid on:

1) 31 January 2013;
2) 30 June 2013. (2)

Interest, if due, should be calculated on a monthly basis assuming a rate of 5% per

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5. Joe Smith sold £40,000 5.5% loan stock in Stuffed Dodos Ltd to his Aunt Matilda on 5
August 2011. Interest is payable annually on 5 April. Neither Joe nor Matilda had any
other transactions in securities.

Calculate the 2011/12 Accrued Income Scheme adjustment for Joe. (2)

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6. Imran made the balancing payment of his 2010/11 Income Tax on 5 August 2012.

Explain the penalties resulting from the late payment of the tax. (2)

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7. Daphne made total pension contributions of £110,000 for the 2011/12 tax year. In the
previous three tax years her pension contributions were:

£
2010/11 45,000
2009/10 40,000
2008/09 45,000

Daphne’s taxable income for the last five years has been £310,000 per year.

Calculate the annual allowance charge for 2011/12. (3)

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8. Skye bought a house on 31 May 1998 for £100,000. It was bigger than she needed,
and Skye immediately rented out 80% of the property to a friend and they both lived in
the property until 31 May 2008 when her friend moved out. Skye lived alone in the
house until it was sold on 30 September 2011 for £160,000.

Calculate the chargeable gain arising on the disposal. (4)

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9. State the date by which HM Revenue & Customs must notify of their intention to
enquire into the following 2011/12* tax returns:

1) Submitted on 15 November 2011;

Candidates received credit for stating the dates applicable to either 2010/11 or
2011/12, or for stating the general rules concerning when notice of an enquiry
must be given.

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10. Qualifying care relief provides tax relief for those receiving income in respect of
providing foster care.

Briefly explain the two alternative ways in which the taxable amount may be
calculated where receipts exceed the qualifying amount. (2)

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11. Desmond has been clearing his attic and has sold two items:

1) A painting which cost £1,400 sold at auction in December 2011 for £6,600. The
auction fees were £660.

2) Jewellery costing £8,000 was sold in November 2011 for £5,000.

Calculate the gain or loss on the disposals. (3)

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12. Your client, Daphne, has asked when the different classes of National Insurance apply.

Briefly explain who is liable to pay Class 1, Class 1A, Class 2 and Class 4
National Insurance Contributions. (3)

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13. Bill’s marriage has ended. The couple had separated in 2010/11 and the divorce was
finalised in January 2012. No formal settlement was ordered by the courts but Bill
transferred his share in the family home to his former wife, Emma, along with antiques
worth £50,000.

Explain how the Capital Gains Tax position would differ if Bill transferred the
assets prior to 5 April 2011 or after that date. (3)

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14. The Association of Taxation Technicians’ Professional Rules and Practice Guidelines
outline how a member should proceed if, for example, both parties to a divorce ask the
member to advise them.

Briefly explain the three courses of action available to a member who is asked to
act by both parties to a divorce. (3)

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15. State eight items that must be included in a written statement confirming the
terms of employment. (4)

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