题目内容

5 Assume today’s date is 1 May 2005.
On 1 April 1999, Alan set up his own company, Alantech Ltd to design and produce technology components in mobile
phones. He personally owns 100% of the share capital. Accounts are drawn up to 31 December each year.
The company was successful, and the profits made allowed Alantech to buy 7.5% of the ordinary shares in another
technology company, Mobile Ltd, on 1 July 2001. The price paid for the shares was ￡75,000. At this time, the
remaining ordinary shares in Mobile were held by Boron Ltd (7.5%), Carbon plc (40%) and Diamond Ltd (45%).
Technology companies faced difficult trading during this time, and although Alantech Ltd continued to make profits,
other companies suffered. This allowed Alantech Ltd to buy 100% of the shares of Boron Ltd (together with its 100%
subsidiary, Bubble Ltd) at a low price as both companies were performing poorly. The acquisition took place on 1
July 2004, and was funded by the sale of a building used in Alantech Ltd’s trade. The building had cost ￡150,000
on 1 September 1999, and was sold for ￡250,000 on 1 May 2004.
Trading results for the companies are as follows:
Additional information:
– Boron Ltd’s chargeable gain took place prior to its acquisition by Alantech Ltd.
– Bubble Ltd has brought forward Schedule D Case I losses of ￡25,000 as at 1 January 2004.
– It is anticipated that Boron Ltd will make a small Schedule D Case I loss in 2005.
– Mobile Ltd is profit making.
Alan believes that to improve the Boron Ltd business, the company needs to invest in new high-tech fixed machinery
within the next year. The projected cost of the fixed machinery is ￡200,000. In order to raise funds, Alantech Ltd and
Boron Ltd will have to sell the shares in Mobile Ltd. From an examination of Boron Ltd’s accounting records, Alan
understands that Boron Ltd’s holding of shares in Mobile Ltd was bought on 1 November 2000 for ￡55,000.
Alan has identified a possible sale of the group’s entire shareholdings (15%) in Mobile Ltd for ￡300,000 to Carbon
plc, as this will give Carbon plc a controlling shareholding in Mobile Ltd. He plans to sell the shares at the beginning
of June 2005. Alan has heard that there is a form. of tax relief available to companies selling shares and would like
advice on whether or not it applies to his situation.
In addition, Alan has struggled to deal with the VAT returns for each company in the group, in particular the intragroup
transactions, and wonders if there is any way in which the VAT accounting for the group can be simplified.
Required:
(a) Calculate the chargeable gain arising on Alantech Ltd’s disposal of the building in May 2004. State clearly
any reliefs available, and the conditions to be satisfied to obtain such reliefs. (6 marks)

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1 Today’s date is 8 June 2005.
David and Debbie were an elderly couple who had worked hard and over a number of years they built up a successful
family company, Dee Limited. Their success allowed them to accumulate a series of investments. David died in May
2005. Debbie is 66 and still in good health.
The couple had two children, Andrew and Allison. Andrew, aged 37, is single but is shortly to be married. He is the
managing director of the family trading company, Dee Limited, which was set up 30 years ago by David and Debbie.
Both Andrew and Allison are shareholders in the company, although Allison does not work for the company. She is
32, and lives abroad with her husband and two children (aged 2 and 4) in a villa gifted to her by Debbie in June
2003. The villa was worth ￡180,000 at that time, but the current value has fallen to ￡110,000 as a result of
exchange rate movements.
Dee Limited is currently worth ￡1,260,000 in total, and the value is unlikely to change in the foreseeable future. The
shareholdings in the company at the date of David’s death (May 2005) were held as follows:
Required:
(a) Calculate the inheritance tax (IHT) that will be payable as a result of David’s death. Your answer should
include calculations of the tax arising on any lifetime transfers and give reasons for any reliefs given.
(12 marks)