(iii) The effect of the restructuring on the group’s ability to recover directly and non-directly attributable inputtax. (6 marks)You are required to prepare calculations in respect of part (ii) only of this part of this question.Note: – You should assume

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(b) The new business
There are two tax advantages to operating the business as a partnership.
(i) Reduction in taxable income
If the new business is operated as a company, Cindy and Arthur would both be taxed at 40% on their salaries. In
addition, employer and employee national insurance contributions would be due on ￡105 (￡5,000 – ￡4,895) in respect
of each of them.
If the new business is operated as a partnership, the partners would have no taxable trading income because the
partnership has made a loss; any salaries paid to the partners would be appropriations of the profit or loss of the
business and not employment income. They would, however, each have to pay Class 2 national insurance contributions
of ￡2·10 each per week.
(ii) Earlier relief for trading losses
If the new business is operated as a company, its tax adjusted trading loss in the year ending 31 March 2008 would
be as follows:

正确答案：Computer The twentieth century witnessed great changes in the whole world: economic boom industrial development and raise in people's living standards to which technological evolution contributed a lot. Among all those inventions which was the greatest one? Different people have different views. Some think the greatest invention was television while others believe it should be atom energy. But as far as I am concerned in terms of the depth of influence no other inventions can be compared with computers which would remain unrivalled even for another one hundred years. First of all computers save a great deal of effort people spend on calculating. Before computers were invented people had to calculate manually. Sometimes it took scientists weeks even months to work out a result daring the course of which they might make mistakes and the accuracy of data was in turn affected. But with the help of computers people are freed from heavy calculation. It only takes seconds to have a result which used to take weeks in the past. Moreover not only the speed but also the accuracy is improved to a large extent. Computers can also simulate different environments that can't be created in real life. In the science research sometimes scientists need to have a simulation environment to improve their theories or as a basis of further research. Without computers it would be difficult to have accurate and reliable results. But computers can make everything easy. Just input programs and data everything will be done. With computers the storage of information has become easier which in turn has increased the whole world's efficiency. At banks post offices and supermarkets people no longer need to queue for a long time because computers help the working staff increase their work efficiency — files and data stored in computers can be located in a very short time and their chances of getting lost are lowered to a large extent. Computers' influence has been further reinforced with the appearance of Internet which was developed based on the local area network (LAN) of computers. Today Internet has become the fastest developing medium in the world and you can do almost everything you need on it: communicating with friends reading news watching movies listening to music etc. But you must do all the above things on a computer. Although many other inventions of the 20th century brought great convenience to human or changed people's lives computers have the most valuable contribution to human and it will have much more contribution in the future.
Computer The twentieth century witnessed great changes in the whole world: economic boom, industrial development and raise in people's living standards, to which technological evolution contributed a lot. Among all those inventions, which was the greatest one? Different people have different views. Some think the greatest invention was television, while others believe it should be atom energy. But as far as I am concerned, in terms of the depth of influence, no other inventions can be compared with computers, which would remain unrivalled even for another one hundred years. First of all, computers save a great deal of effort people spend on calculating. Before computers were invented, people had to calculate manually. Sometimes it took scientists weeks, even months to work out a result, daring the course of which they might make mistakes and the accuracy of data was in turn affected. But with the help of computers, people are freed from heavy calculation. It only takes seconds to have a result which used to take weeks in the past. Moreover, not only the speed but also the accuracy is improved to a large extent. Computers can also simulate different environments that can't be created in real life. In the science research, sometimes scientists need to have a simulation environment to improve their theories or as a basis of further research. Without computers it would be difficult to have accurate and reliable results. But computers can make everything easy. Just input programs and data, everything will be done. With computers, the storage of information has become easier, which in turn has increased the whole world's efficiency. At banks, post offices, and supermarkets, people no longer need to queue for a long time, because computers help the working staff increase their work efficiency — files and data stored in computers can be located in a very short time and their chances of getting lost are lowered to a large extent. Computers' influence has been further reinforced with the appearance of Internet, which was developed based on the local area network (LAN) of computers. Today, Internet has become the fastest developing medium in the world and you can do almost everything you need on it: communicating with friends, reading news, watching movies, listening to music etc. But you must do all the above things on a computer. Although many other inventions of the 20th century brought great convenience to human or changed people's lives, computers have the most valuable contribution to human, and it will have much more contribution in the future. 解析：  在上个世纪，世界发生了巨大的变化。题目要求考生自己命题，淡谈自己认为20世纪最应该记住的发明是什么。
  文章本身并不难写，首先要确定自己的观点，就是20世纪最重要的发明是什么。所谓“最应该记住”，就是说它对整个世界的变化影响最大。写作时，可以有两种方法：一种是一一列举该发明的重要性，对社会的发展、人们的生活有什么重大的影响，论证时还可以用反证法说如果没有这种发明世界会怎么样；另外一种就是在列举该发明重要性的同时，将它和其他较为重要的发明进行对比，从而更加凸显其重要性。

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(d) Implications for Gerard of the changes to Fizz plc’s bonus scheme
Value received
Under the existing scheme Gerard receives approximately ￡4,500 each year. This is subject to income tax at 40% and
national insurance contributions at 1% such that Gerard receives ￡2,655 (￡4,500 x 59%) after all taxes.
Under the proposed share incentive plan (SIP), Gerard expects to receive free shares worth ￡3,500 (￡2,100 + ￡1,400).
Provided the shares remain in the plan for at least five years there will be no income tax or national insurance contributions
in respect of the value received. Gerard’s base cost in the shares for the purposes of capital gains tax will be their value at
the time they are withdrawn from the scheme.
In addition, the amount he spends on partnership shares will be allowable for both income tax and national insurance such
that he will obtain shares with a value of ￡700 for a cost of only ￡413 (￡700 x 59%).
Accordingly, Gerard will receive greater value under the SIP than he does under the existing bonus scheme. However, as noted
below, he will not be able to sell the free or matching shares until they have been in the scheme for at least three years by
which time they may have fallen in value.
Timing of receipt of benefit
Under the existing scheme Gerard receives a cash bonus each year.
The value of free and matching shares awarded under a SIP cannot be realised until the shares are withdrawn from the
scheme and sold. This withdrawal cannot take place until at least three years after the shares are awarded to Gerard.
Accordingly, Gerard will not have access to the value of the bonuses he receives under the SIP until the scheme has been in
operation for at least three years. In addition, if the shares are withdrawn within five years of being awarded, income tax and
national insurance contributions will become payable on the lower of their value at the time of the award and their value at
the time of withdrawal thus reducing the value of Gerard’s bonus.

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(ii) The implications of delaying the sale of the business
The implications of delaying the sale of the business until 30 April would have been as follows:
– Clint would have received an additional two months of profits amounting to ￡6,920 (￡20,760 x 1/3).
– Clint’s trading income in 2006/07 would have been reduced by ￡13,015 (￡43,723 – ￡30,708), much of which
would have been subject to income tax at 40%. His additional trading income in 2007/08 of ￡19,935 would all
have been taxed at 10% and 22%.
– Clint is entitled to the personal age allowance of ￡7,280 in both years. However, it is abated by ￡1 for every ￡2
by which his total income exceeds ￡20,100. Once Clint’s total income exceeds ￡24,590 (￡20,100 + ((￡7,280
– ￡5,035) x 2)), his personal allowance will be reduced to the standard amount of ￡5,035. Accordingly, the
increased personal allowance would not be available in 2006/07 regardless of the year in which the business was
sold. It is available in 2007/08 (although part of it is wasted) but would not have been if the sale of the business
had been delayed.
– Clint’s class 4 national insurance contributions in 2006/07 would have been reduced due to the fall in the level
of his trading income. However, much of the saving would be at 1% only. Clint is not liable to class 4 national
insurance contributions in 2007/08 as he is 65 at the start of the year.
– Changing the date on which the business was sold would have had no effect on Clint’s class 2 liability as he is
not required to make class 2 contributions once he is 65 years old.

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(ii) The implications of selling the Oxford house and garden in two separate disposals
The additional sales proceeds would result in an increase in Clifford’s capital gains and consequently his tax liability.
When computing the gain on the sale of the house together with a small part of the garden, the allowable cost would
be a proportion of the original cost. That proportion would be A/A + B where A is the value of the house and garden
that has been sold and B is the value of the part of the garden that has been retained. Principal private residence relief
and taper relief would be available in the same way as that set out in (i) above.
When computing the gain on the sale of the remainder of the garden, the cost would be the original cost of the property
less the amount used in computing the gain on the earlier disposal. Principal private residence relief would not be
available as the land sold is not a dwelling house or part of one.

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(b) Recoverability of input tax
Sales by Nikau Ltd of its existing products are subject to UK VAT at 17·5% because it is selling to domestic customers who
will not be registered for VAT. Accordingly, at present, Nikau Ltd can recover all of its input tax.
Sales to customers in North America will be zero rated because the goods are being exported from the EU. Zero rated supplies
are classified as taxable for the purposes of VAT and therefore Nikau Ltd will continue to be able to recover all of its input tax.