A friend of yours, John currently works for a computer software company. He is considering leaving...

  

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A friend of yours, John currently works for a computer software company. He is considering leaving his job to start his own business (as a sole trader) manufacturing specialist silicon computer chips. John has never run his own business before and knowing that you are studying tax he has turned to you for advice in relation to his tax obligations. He expects his sales turnover to be approximately €150,000 in the first twelve months of trading. He is planning to purchase a small factory, machinery, and a van for use in the business. He also has plans to employ a number of staff. He plans to start a pension both for him and will commence an employer pension for his employees and is planning to pay a contribution for his employees. He plans to pay his employees a salary, a bonus for good performance and will, at the option of his employees, provide a company car for their use (for both business and personal use). He will also pay their expenses for purchases made by them in the course of their employment (which are vouched as work expenses) and will provide a sum of £50 each month for their fuel expenses for travelling to and from work. John will also pay into a Permanent Health insurance policy. He has also asked you for advice in relation to any tax exemptions or reliefs that he may be entitled to and that will minimise his tax liabilities. REQUIREMENT: Prepare a report for John detailing your advice in relation to his income tax, PAYE and VAT obligations. Your report should include details of: 1. What taxes he should register for as a sole trader, and the procedures for registration. (10 marks) 2. Basis of assessment for the income from his sole trade. 3. Allowable and disallowed expenses for his sole trade. 4. Tax relief for capital expenditure. 5. Tax obligations as an employer. (10 marks) (15 marks) (15 marks) 6. The treatment of his employees' remuneration and recommendations for minimising the tax liabilities of his employees. 7. Recommendations for minimising his overall tax liability. (15 marks) A friend of yours, John currently works for a computer software company. He is considering leaving his job to start his own business (as a sole trader) manufacturing specialist silicon computer chips. John has never run his own business before and knowing that you are studying tax he has turned to you for advice in relation to his tax obligations. He expects his sales turnover to be approximately €150,000 in the first twelve months of trading. He is planning to purchase a small factory, machinery, and a van for use in the business. He also has plans to employ a number of staff. He plans to start a pension both for him and will commence an employer pension for his employees and is planning to pay a contribution for his employees. He plans to pay his employees a salary, a bonus for good performance and will, at the option of his employees, provide a company car for their use (for both business and personal use). He will also pay their expenses for purchases made by them in the course of their employment (which are vouched as work expenses) and will provide a sum of £50 each month for their fuel expenses for travelling to and from work. John will also pay into a Permanent Health insurance policy. He has also asked you for advice in relation to any tax exemptions or reliefs that he may be entitled to and that will minimise his tax liabilities. REQUIREMENT: Prepare a report for John detailing your advice in relation to his income tax, PAYE and VAT obligations. Your report should include details of: 1. What taxes he should register for as a sole trader, and the procedures for registration. (10 marks) 2. Basis of assessment for the income from his sole trade. 3. Allowable and disallowed expenses for his sole trade. 4. Tax relief for capital expenditure. 5. Tax obligations as an employer. (10 marks) (15 marks) (15 marks) 6. The treatment of his employees' remuneration and recommendations for minimising the tax liabilities of his employees. 7. Recommendations for minimising his overall tax liability. (15 marks)

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1 To register as a Sole Trader in Ireland you need to register for Income Tax You can register for I... View the full answer