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4 pages/≈1100 words
No Sources
Accounting, Finance, SPSS
Math Problem
English (U.S.)
MS Word
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Taxation In-Tray Exercise Calculations (Math Problem Sample)


Paper details There are five taxation problems to tackle from your clients. In each case you are required to present a short note which addresses the issue, providing suitable calculations to back up your answer. If you think that further information is needed, then you must identify what is required and why it is needed. A formal report is not required but you advice should be professionally presented and must be word processed, hand written submissions will not be marked. Referencing is not needed in calculations. Any assumptions made should be clearly stated. The word count should not exceed 1,200 words.


Taxation "in-tray exercise”
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1 Case One
Client A
Property rented during the tax year 2013-14
Assumption: The tax year commenced on 1st July 2013 -31st June 2014
The tenant left the property owing a two month‘s rent of £1000, yet to be recovered. Client A would have been taxed the rental income during the months of occupation by the tenant only (5months). The unrecovered amount totalling to £1000 would be treated as bad debts, hence deducted from the gross rental income. The client must further prove to the revenue authority that the tenant is unable to pay the outstanding amount and should be considered as bad debts by the tax authority. NB Bad debts are treated as allowable expenses in the calculation of taxable rental income. Any amount spent on redecoration/repairs, and maintenance is also treated as deductible expenses. In this case, the cost of the £2500, £550 and £450 for redecoration, other property cost and looking for the new tenant respectively would be deducted from the gross rental income. The incomes from the new tenant's commencing from the 5th April 2014 added to the rental income during the tax year. (3months).
Other allowable expense includes:
* Commission and fees paid to property management agents
* Interest on a mortgage or loans to purchase or improve the propert
* The cost of structural alteration of the building provides rent does not increase with six months of incurring expenditure.
Computation of Client a Property income assessment
For the tax year ended June 2014

Rental income (old tenant) 500*5


Add: (new tenant) 600*3


Gross rental income


Less: Allowable expenses

Bad debts




Service fees


Other expenses


Total expenses


Taxable rental income


NB: Losses from rental properties are carried forward to set the future profits
2 Case Two
Client B
Typically, failure to declare tax while generating profits may impose penalties or fines by the tax authority. Another circumstance may include:
* Giving an incorrect statement or return
* Failure to furnish a return in time
* Failure to inform chargeability to tax
* Maintain or prepare false books of accounts
* Intentional disregard for the law and adopt a deliberate cover up tactics
* Attitude of the taxpayer and type of the business
* Time span of the tax evasion
* Whether or not the declaration was voluntary by the taxpayer
* The level of cooperation received from the taxpayer in case of any investigation by the tax authority
I would advise client B to report his annual profits and records for the previous year and current year for tax assessment to the tax authority. It would help avoid fines at a later date in case the authority finds out his tax evasion. He should also offer a reliable reason or evidence why he has not been submitting his returns.
3 Case Three
Computation of Client C Tax adjusted trading profits Assessment
Computation of Client C Tax adjusted trading profits...
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