Tracy-Ann ceased self-employment on 30 June 2021. She was then employed by Kitten ple for the...

  

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Tracy-Ann ceased self-employment on 30 June 2021. She was then employed by Kitten ple for the six-month period from 1 August 2021 to 31 January 2022. Tracy-Ann commenced self-employment again, in a new business, on 1 February 2022. Self-employment ceasing on 30 June 2021 1) Tracy-Ann's trading profit for the final 14-month period of trading from 1 May 2020 to 30 June 2021 was E111,600. This figure is before taking account of capital allowances. 2) The tax written down value of the capital allowances main pool at 1 May 2020 was £18,700. On 11 June 2020, Tracy-Ann purchased a printer for £3,700. On the cessation of trading, Tracy-Ann personally retained the printer. Its value on 30 June 2021 was £1,980. The remaining items included in the main pool were sold for £8,500 on 30 June 2021. 3) Tracy-Ann had unused overlap profits brought forward of £23,270 Employment from 1 August 2021 to 31 January 2022 1) During the six-month period from 1 August 2021 to 31 January 2022, Tracy-Ann was paid a gross monthly salary of £12,700 in respect of her employment with Kitten ple. 2) Throughout the period from 1 August 2021 to 31 January 2022, Kitten ple provided Tracy-Ann with living accommodation. The property is rented by Kitten ple at a cost of £710 per month (this is higher than the annual value of the property). Kitten ple also paid for the running costs relating to the property, and for the period 1 August 2021 to 31 January 2022 these amounted to £1,840. 3) Throughout the period from 1 August 2021 to 31 January 2022, Tracy-Ann's three-year-old son was provided with a place at Kitten ple's workplace nursery. The total cost to the company of providing this nursery place was £4,920 (120 days at £41 per day). 4) Tracy-Ann used her private motor car for business purposes. During the period from 1 August 2021 to 31 January 2022, she drove 7,200 miles in the performance of her duties for Kitten ple, for which the company paid an allowance of 37 pence per mile. Self-employment from 1 February 2022 1) Tracy-Ann's trading profit for the first five-month period of trading from 1 February to 30 June 2022 was £57,200. This figure is before taking account of capital allowances. 2) The only item of plant and machinery owned by Tracy- Ann, and used in this business, is office equipment which was purchased for £28,300 on 1 February 2022. Property income 1) During the period 1 August 2021 to 31 January 2022, Tracy-Ann let out her main residence at a monthly rent of £1,600. Tracy-Ann lived in this property up to 31 July 2021 and then again from 1 February 2022 onwards. 2) The only expenditure incurred by Tracy-Ann in respect of the letting was property insurance, which cost £750 for the year ended 5 April 2022. 3) Tracy-Ann has opted to calculate her property income using the accruals basis. Rent-a-room relief is not available in respect of the letting. Self-assessment tax return Tracy-Ann filed her self-assessment tax return for the tax year 2021-22 on 14 August 2022. She is quite confident that all of her income for the tax year 2021-22 was correctly declared and that no deductions were incorrectly claimed Required: (a) Calculate Tracy-Ann's taxable income for the tax year 2021-22. Note: You should indicate by the use of zero (0) any items which are not taxable or deductible. (12 marks) (b)(i) State the period during which HM Revenue and Customs (HMRC) will have to notify Tracy-Ann if they intend to carry out a compliance check in respect of her self-assessment tax return for the tax year 2021- 22, and the likely reason why such a check would be made. (2 marks) (ii) Advise Tracy-Ann as to how long she must retain the records used in preparing her self-assessment tax return for the tax year 2021-22. (1 mark) Tracy-Ann ceased self-employment on 30 June 2021. She was then employed by Kitten ple for the six-month period from 1 August 2021 to 31 January 2022. Tracy-Ann commenced self-employment again, in a new business, on 1 February 2022. Self-employment ceasing on 30 June 2021 1) Tracy-Ann's trading profit for the final 14-month period of trading from 1 May 2020 to 30 June 2021 was E111,600. This figure is before taking account of capital allowances. 2) The tax written down value of the capital allowances main pool at 1 May 2020 was £18,700. On 11 June 2020, Tracy-Ann purchased a printer for £3,700. On the cessation of trading, Tracy-Ann personally retained the printer. Its value on 30 June 2021 was £1,980. The remaining items included in the main pool were sold for £8,500 on 30 June 2021. 3) Tracy-Ann had unused overlap profits brought forward of £23,270 Employment from 1 August 2021 to 31 January 2022 1) During the six-month period from 1 August 2021 to 31 January 2022, Tracy-Ann was paid a gross monthly salary of £12,700 in respect of her employment with Kitten ple. 2) Throughout the period from 1 August 2021 to 31 January 2022, Kitten ple provided Tracy-Ann with living accommodation. The property is rented by Kitten ple at a cost of £710 per month (this is higher than the annual value of the property). Kitten ple also paid for the running costs relating to the property, and for the period 1 August 2021 to 31 January 2022 these amounted to £1,840. 3) Throughout the period from 1 August 2021 to 31 January 2022, Tracy-Ann's three-year-old son was provided with a place at Kitten ple's workplace nursery. The total cost to the company of providing this nursery place was £4,920 (120 days at £41 per day). 4) Tracy-Ann used her private motor car for business purposes. During the period from 1 August 2021 to 31 January 2022, she drove 7,200 miles in the performance of her duties for Kitten ple, for which the company paid an allowance of 37 pence per mile. Self-employment from 1 February 2022 1) Tracy-Ann's trading profit for the first five-month period of trading from 1 February to 30 June 2022 was £57,200. This figure is before taking account of capital allowances. 2) The only item of plant and machinery owned by Tracy- Ann, and used in this business, is office equipment which was purchased for £28,300 on 1 February 2022. Property income 1) During the period 1 August 2021 to 31 January 2022, Tracy-Ann let out her main residence at a monthly rent of £1,600. Tracy-Ann lived in this property up to 31 July 2021 and then again from 1 February 2022 onwards. 2) The only expenditure incurred by Tracy-Ann in respect of the letting was property insurance, which cost £750 for the year ended 5 April 2022. 3) Tracy-Ann has opted to calculate her property income using the accruals basis. Rent-a-room relief is not available in respect of the letting. Self-assessment tax return Tracy-Ann filed her self-assessment tax return for the tax year 2021-22 on 14 August 2022. She is quite confident that all of her income for the tax year 2021-22 was correctly declared and that no deductions were incorrectly claimed Required: (a) Calculate Tracy-Ann's taxable income for the tax year 2021-22. Note: You should indicate by the use of zero (0) any items which are not taxable or deductible. (12 marks) (b)(i) State the period during which HM Revenue and Customs (HMRC) will have to notify Tracy-Ann if they intend to carry out a compliance check in respect of her self-assessment tax return for the tax year 2021- 22, and the likely reason why such a check would be made. (2 marks) (ii) Advise Tracy-Ann as to how long she must retain the records used in preparing her self-assessment tax return for the tax year 2021-22. (1 mark)

Answer rating: 100% (QA)

a TracyAnns taxable income for the tax year 202122 is Profit from selfemployment 14 months 11160... View the full answer